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You do not necessarily get what you pay for: that’s why there are Lemon Laws.

The cost of investing. You can control some costs. Others, you cannot.

Costs of investing

Costs you can choose to control:

  • Costs of financial planners, investment advisors, salesmen etc. (incl loads and 12b-3)
  • Expense ratio (+ read prospectus for layers of “advisor” fees, etc.)
  • Current turnover ratio
  • Price at which buy (dollar cost avg)
  • Buying with tax-deductible money

Costs you cannot control but can incorporate in portfolio:

  • Current relative risk and return

Cost of holding

Costs you can choose to control:

  • Diversification w/non-correlation
  • Size of “bear market” emergency fund
  • Use of insurance (and what insurance)
  • Cost of Medicare deductibles and copay fund (and how to vary it)

Costs you cannot control:

  • Changing relative cost and return but can incorporate in portfolio
  • Changing turnover ratio and managers
  • Changing market preferences
  • Inevitable bear markets
  • “Irrational exuberance”
  • Playbook of institutional investors

Cost of selling (turning paper into real money gains and losses)

Costs you can choose to control:

  • Settling your estate
  • Type and timing of payments received from a family business or family ltd partnership
  • Type and amount of insurance
  • Taxes

Costs you cannot control:

  • Inflation


The cost of investing: negative returns










Roger G. Ibbotson and Rex A. Sinquefield, “Stocks, Bonds, Bills and Inflation 2011 Yearbook” (Chicago: Ibbotson Associates.)


Elder law attorney, Terry Garrett, is a member of the National Academy of Elder Law Attorneys and is an Approved Guardianship Attorney. She assists people in elder law, estate and special needs planning, guardianship and settling estates. She graduated with honors from Cornell University. She was on the Dean’s List at Wharton Business School. She earned her J.D. at Columbia Law School, receiving the Parker Award and a Mellon Fellowship.

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