Focus on performance not fees, what really matters is net returns. As an investor, what we ultimately care about is how much we have in our pocket when all is said and done. The bottom line matters and the rest is just a side show; you do not go to the bank with what little you saved on fees, you go with your total returns..
Why are we so obsessed with fees, they are like Kim Kardashian; everybody talks about her but she doesn’t really matter. The press has made her famous and perpetuate her celebrity status just like they have done to fees. Journalists have to write about something all the time and talking about fees is popular. The general public get caught up in this debate and lose track about what really matters.
Fees are just one part of the equation.
Performance minus fees equals net return. Investors ignore the two most important aspects of investing: performance and net return. Fees only matter when your investment is not performing. Performance is paramount as it has the biggest impact on the bottom line.
You can buy cheap wine and a cheap car but what do you get? You get what you pay for. You can buy a MacDonald’s burger or you can eat at the best restaurant in town. The choice is yours. Do you want the best or do you want cheap?
Net returns is what really matters
You pay more for quality. The more you pay the more you should get. I worry when I do not pay or if something is too cheap. What’s wrong with the product? Why is it so cheap? Ask your investment manager why your fees are so low, it might be that he is not working hard enough, not doing the necessary due diligence, tracking local and global movements to ensure your investments are maximised.
Pay more and you get more.
The problem is, if you pay more and your investment manager does not deliver. If this is happening, fire him and find yourself a top investment manager who charges more but out-performs the market. If you want the best, pay the price!