Tip: Check the fees
Check if a fund retains performance fees. You will find this information in the "key investor information" or in the sales prospectus. While a fair performance fee is acceptable for good equity funds, it makes little sense in bond and money market funds, as they have lower expected returns anyway.
Do not buy a fund where the performance of the past, which is the first indication of the fund management skills, does not justify the success fee. Alternatively, you can orientate yourself by our fund valuations. We report on the Internet under and in each financial test book the performance after deduction of fees.
Total Expense Ratio (TER)
A measure that informs the fund's statement of accounts on the internal cost burden of a fund in the past financial year is the Total Expense Ratio (TER).
Attention: Many investors believe that all costs are covered. But that is not so. It does not include the purchase and selling expenses, the investors pay or the initial charge. In addition, it does not include in Germany the transaction costs for purchases / sales of securities incurred at the fund level.
However, the transaction costs incurred by the fund management have been reduced since 1. July 2011 in the so-called Key Information Document (KID) (see page 22). Nevertheless, the lower the TER, the better. If the TER is greater than 2 percent, the fund is rather expensive.
The more liquid your investments, the faster they are available, that is, exchangeable into money. The catch is: the greater the liquidity of a product, the lower is the return, as a rule.
Why liquidity is important
For example, you can dispose of the money on your current account at any time, but you will usually not receive any interest. However, you must keep a portion of your assets liquid to pay your daily and extra bills.
If you are not liquid, it can be quite expensive, because then additional default and account overpayment interest is due to you.
High liquidity or high return
It is therefore important to find the balance between liquidity and yield chances. A rule of thumb states that you should have at least three monthly income as an emergency reserve. However, this does not have to be on the current account, but can also be created for example on a interest-bearing daily money account.
Simply differentiate between daily liquidity and short-term liquidity. With the daily liquidity you pay your bills of everyday life needs like shopping or in the restaurant. This is mainly about cash payments and payments with your giro card (formerly known as EC card).
You can also expect a personal emergency cash reserve that you have at your home, in case you have to leave your house quickly, for example due to a natural catastrophe.
The short-term liquidity is the need that you need to be able to provide within a few days, and, if necessary, to replenish your checking account for daily liquidity. The short-term liquidity should bring interest in any case, so as to counteract inflation at least something. Because inflation constantly increases your standard of living and thus reduces your assets.
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