Warren Buffett is probably the most successful investor of all time, and he's a very, very long-term investor. Here's a quote from his Berkshire Hathaway chairman's letter:
"When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever."
Consider how long you usually invest. Is it forever? Then think about Wall Street. Investment banks and hedge funds are buying and selling billions in assets day after day. They're holding stocks for hours, minutes and sometimes milliseconds.
Those decisions cost time and energy to make, and those transactions cost money to execute. But out in Omaha, Warren Buffett keeps his decisions and his trading costs to a minimum, and you should, too.
“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
FutureAdvisor clients are long-term investors, by definition. The low-cost funds we consistently recommend can serve people until they retire, and even beyond that. We know what our clients' ideal portfolios looks like, and we maintain a balance of assets to help maximize long-term growth. Everything else is an expensive mistake.
Why are buying and selling so expensive?
Because every time you buy a stock that you think will go up, you pay a transaction commission. Every time you sell a stock out of fear, you pay another transaction commission. That's good business for your broker, but bad for you.
The whole premise of Wall Street is to charge you a little money to make you a lot more. It's a great deal, when things go as expected... Most of the time, investors pay the charge and never see results.
Excessive buying and selling is known as churn. It's actually illegal for brokers to encourage churn just to generate fees for themselves, but all too frequently, investors end up buying and selling a lot anyway.
That's because brokers get paid a commission of the total amount of trades they convince their customers to make. Every month, they start again from zero, and every month they have to pay the rent. So Wall Street's interests aren't aligned with yours. Your broker needs you to make lots of decisions, and pay lots of fees, to survive.
That's not how we operate at FutureAdvisor. We'll tell you for free exactly what you should buy for the long-term. If you don't have the time to balance your portfolio yourself, we'll do it for you -- for a flat fee.
There's no better way to improve the performance of your investments than to lower your transaction fees. And there's no easier way to find long-term investments than with a free analysis.