Investing for the future is something every worker should consider, and a number of investment companies try to make investing easier and less of a mystery. But whether you choose to invest with a mutual fund family, a brokerage firm or the local bank, it is important to look at the fees and expenses you will pay. Choosing the right investment firm is a critical decision, one that will impact you throughout your career and your retirement.
Mutual Fund Families
Mutual funds work by pooling the money from many different investors and using it to buy widely diversified baskets of stocks, bonds and fixed-income investments. There are hundreds of mutual fund families in existence, each with its own investing philosophy and stable of funds. When selecting a mutual fund family, consider not only the past performance of the funds, but the charges, fees and expenses as well. High fees can eat up a significant amount of your investment return over time. Firms like Vanguard, TIAA-CREF and Charles Schwab are known for their low fees.
Online discount brokers, such as E*Trade, TD Ameritrade and Scottrade, offer low-cost trades for investors who are comfortable making their own decisions. These firms also offer investment advice, but there is often a charge for those services, although the firms might waive those charges for large account holders. Investors who need more one-on-one interaction can arrange an appointment with an investment adviser at one of the physical branches maintained by all three of the discount brokers named above. A list of branch locations is available at each company's website. Many other brokerage firms exist as well.
Large money center banks, such as Bank of America, Wells Fargo and Chase, have complete investment departments offering everything from mutual funds and individual bonds to investment advisory services. Many small and midsize banks and credit unions also offer investments to their clients, so you might want to start with the branch manager at your bank when considering investing. Investments offered by banks often come with higher fees and expenses than similar investors at mutual fund and brokerage firms.