1. Don’t pay fat fund fees:
You don’t need to wait for New York Attorney General Eliot Spitzer to swoop in and help lower your fund fees. You can do it yourself.
A fund’s expense ratio will quickly tell you if you're getting gouged. The average actively managed U.S. stock fund sports charges 1.55% in annual expenses. You should try to find funds that charge even less — much less. Remember: The less money you pay in fees, the more money winds up in your pocket.
Over time those dollars really add up. Say you have a $5,000 investment and you switch to a fund with an annual expense ratio that’s one whole percentage point lower. By investing those savings, you could wind up with almost $12,000 more after 30 years.
2. Simplify your accounts:
You can start making your financial life manageable by combining your investment accounts. If you’ve changed jobs several times over the years, you might have a handful of 401(k)s floating around. Pile those on top of the checking, savings, brokerage accounts and IRAs, and you’re ready to start stuffing money in the trunk of your car.
Plus, it’s hard to build a portfolio in eight places at once. You can roll your old 401(k) accounts into an IRA and reduce the number of brokerage and mutual fund accounts you have open. It’ll be much easier to see what you own.
3. Let go of the losers:
If you’ve been sitting a stock or fund for years — waiting for it to get back to what you paid for it — it’s time to let go. Sometimes you’ve got to give in and just sell. Take the tax loss. Use it to offset any gains you’ve made in the last year. And move on.
Dagen McDowell is an FNC business correspondent and has been a regular on Cashin' In since its debut in May 2001.