Investors often get excited about the potential income an investment
can make and forget to consider fees and tax implications that can
diminish their profits.When trading stocks, for example, a single stock purchase can cost you $10 or more, even with a low-cost, online brokerage account. If you are buying 10 shares of a $10 stock, that value of the stock will have to increase 10% before you can break even. Add capital gains tax you now owe on the appreciation of this asset, and you have actually lost money on your prudent stock purchase. How much you are paying in taxes depends on the type of investment and how long you hold the asset.You’re not out of the woods yet in escaping fees. If you invest in a mutual fund, you are paying additional fees. Typically you pay a small management fee and you may even be paying an extra load fee to your financial planner. The load fee is simply an extra charge that goes to pay your financial planner a commission.