Common Cents: Easy Ways To Grow Your Money

Expense Ratio

If you're like me, just the mere inclusion of a mathematical term can complicate things. But, knowing and understanding expense ratios are easier than you think, it's merely the percentage investors pay for administrative fees and operating costs. That includes salaries, paper and pens, and even building costs that a mutual fund incurs to function.

If your portfolio provides multiple options to, say, large cap funds, then looking at how much of your investment will be used for normal operations should be considered.

"If you have more than one, then certainly expense ratio should be important when choosing," says Ritter. Let's say there are two Common Cents Large Cap funds, and all things are equal, except varied expense ratios of 1% and 2%. Consider the fund with the lower percent.

Like most investments, paying less is more beneficial to money growth. Another tip: Ballooning assets tend to deflate expense ratios because the more money a fund has, the lower the percentage the fund needs to operate.

Highs and Lows

At some major retirement providers, the 52 week high and low is listed for funds. Personally, I never invest in a fund if it's a record price, whether that's high or low. I call it the money ceiling rule. It's my own mind game. I use the high and low price to purchase somewhere in the middle using funds from my money market account.

Then again, according to Ritter, "when it comes to constructing your portfolio, there are much more important aspects of choose investments."

What steps do you take when you're moving around? Be Honest. How do you pick and choose asset allocation?

It's not just your money, it's common cents. In this new weekly fixture, we'll take a look at common money problems. Write to us at [e-mail], or place your suggestions in the comment section below.