ZOOM IN! (This time)

Last week we talked about "zooming out" to maintain perspective on your financial goals and how your underlying accounts perform. Zooming out is important to allow you, the investor, to see the bigger picture without getting bogged down by week to week, month to month, or even year to year volatility in some cases. A 10 year time horizon should not be disrupted by a 6-month down turn.

Today, we want to remind you to ZOOM IN to your underlying holdings and make sure they are both reasonable in expense and minimally traded. If you have a 401(k) at work and are provided a list of mutual funds and ETF's to choose from, be sure to first look at the expense ratio. The expense ratio is the measures of how much of the fund's assets are used for administrative and other operating expenses. The higher this figure, the more of your dollars that go to the managers of the product and less to your investment. As investors, we can make all of the future forecasts we want, but the one KNOWN CONSTANT is the expense ratio. There are plenty of quality funds available with low(er) expense ratios, and it usually pays to choose them over materially more expensive products.

The other principal you want to zoom in on is the volume of trading in your account (if it is a brokerage account). Brokerage accounts are commission based accounts where the broker makes money when buying and selling occurs on your behalf. There may be great reasons for the trades, but if it is a brokerage account you want to be aware that through activity, commission is created that comes out of your investment dollars and into the pocket of the broker. At Red Oak Financial Group, we primarily operate in advisory accounts, where we are compensated on advising you for a percentage fee rather than every time a trade is placed. Through this model, our incentives are aligned with you. We focus on low cost, long term, broadly diversified investments that provide you with the best strategy to achieve your financial goals.

Remember to ZOOM IN when choosing your next investment and pick the product and financial professional that serves you best! #zoomin #wealthtipwednesday #expensemanagement

Consult your financial professional for more information.

-Your Friends at Red Oak Financial Group