Financial Portfolios with Safe Harbor

The folks from Safe Harbor Financial stopped by Studio10 with some great information on financial portfolios.

Below is a list of question and answers that were discussed on Studio10 as well as information on how to contact Safe Harbor Financial if you have any questions.

1. Are you paying attention to your portfolio costs?
The investment world is full of hidden expenses.  Mutual funds top the list but they certainly aren’t alone.  It almost doesn’t matter where you invest your money; odds are good that you are paying hidden fees and expenses that you may not realize. The Wall Street Journal published a good piece on how this all works. The article shows that the hidden fees in mutual funds are often the same as, or more than, the fees that they have to disclose.

2. How much does it cost to own a mutual fund?    
Mutual funds are expensive.  The average expense ratio of equity funds is 1.43% with the weighted average ratio being 0.79%.  But that is just the beginning.  There are hidden cost and invisible costs that mutual funds can carry.  They include sales loads which are paid to the broker as well as similar fees being paid to fund companies.  There are hidden costs associated with trading, research and potential market impact. These add up and the real cost of owning mutual funds can be 2% to 3% or more!  Considering most mutual funds don’t outperform their respective benchmarks, these can be huge obsticles to overcome. So what does that look like? Let’s put this into real numbers so you can see what this means.  Imagine you have $500,000 in a mutual fund portfolio. Here is what 2% in fees are costing you each year.

$500,000 x 2% = $10,000.

If you hold that mutual fund for 10 years, it would cost you $100,000 in feels.  Does your performance over the last ten years warrant that kind of cost?  Not likely.

3. What about tax implications?
Mutual funds are extremely tax inefficient. The ten largest mutual funds had an average turnover ratio of almost 75% according to morningstar.com. That’s high for a single year. For investors this means higher taxes. Typically, at the end of each year gains are distributed to the shareholders and it doesn’t matter if you bought the fund in October.  You are still responsible for the full year’s taxable gains.

For a free comprehensive personal review of your financial portfolio or to make an appointment with Jim, email Jim at jbyrd@safeharfin.com or call 1-251-625-1226 or toll free at 1-877-251-1984.

Find out how to get a free copy of his DVD or book, The Ultimate Success Secret, email Jim at jbyrd@safeharfin.com or call 1-877-251-1984.

Safe Harbor Financial Services
9056 Merritt Lane
Daphne, AL 36526
Call Toll Free: 866-251-1984 or local 251-625-1226
www.safeharfin.com