For the amount of financial advice that we find in books, magazines, and online, we still tend to make a lot of mistakes when it comes to our money.  Some of these mistakes might not cost us huge sums, but others can cost us a small fortune.  Even the small mistakes, multiplied over a lifetime, can add up to an enormous sum.

One of the big things is mutual funds.  Do you actually know how much you pay for the funds in your retirement account?  Mutual fund companies don’t send out monthly or quarterly bills.  Instead, they quietly deduct their fees from the returns on your investments.  These fees can add up to thousands of dollars over a lifetime of investing.  To see how much you are really paying, use a free service use a free service such as Morningstar.com to track the actual expense of your funds and ETFs.

Errors in your way of thinking can cause problems as well.  Don’t equate monthly payments with affordability.  Too many people decide whether they can afford something based on whether they can manage the monthly payment.  This is particularly true for homes and cars.  Just because you can handle a payment does not mean you can truly afford the item.  Monthly payments ignore the true cost of ownership.  A car, for example, also requires insurance, gas, repairs, and maintenance.  Instead of focusing on the monthly payment, separate needs from wants and evaluate how you might better use the money.  If you have consumer debt, for example, consider paying off the debt before buying something that will commit you to future monthly payments for years to come.

If you can reduce your mortgage payments, do it.  Reducing a mortgage by even 1% can result in substantial savings.  Whether it’s due to falling mortgage rates, which are at historic lows, or an improved credit score, you may be able to save thousands of dollars of the life of your home loan by refinancing.  Even if you have a low rate now, you should look into the current mortgage rates to see if you can do better.  That 1% savings may justify refinancing over the life of the loan.

A lot of people miss the great deals they can find online.  You can find deals, coupons, and promo codes on just about everything.  Also, many retailers offer additional discounts if you buy online.  Shopping online is often more convenient than going to malls or stores and having to wait in lines.  Before you set out on your next shopping trip, check online and see what coupons or deals are available for the products you are looking for.  The deals could be substantial.

Now that we are post tax season, pending you didn’t file an extension, you should take the time to scan over your return.  If you got a rather large refund, it’s simply the result of you having too many withholdings taken out of your check.  Letting the government hang on to the money for a year until it comes time to file again gives the government an interest free loan.  Instead, ask your employer for new W-4 forms and adjust your withholdings so you can pocket more of your paycheck now.

Finally, don’t mislead yourself into thinking that making the minimum payments on credit cards will get you out of debt.  Even low interest rate credit cards charge a high interest rate.  Just making the minimum payments will add a lot of interest to your total payments over the life of that debt.  Rather than making just the minimum payment, commit to paying more than the minimum, even if by just a few dollars.  This will help pay off your debt much faster.

The markets can be very fickle and uncontrollable, but what you can control is cost.  Keeping your costs down is crucial to your success as an investor.  The first step is to cut your fund fees.  I’m sure by now that you have already learned to avoid sales fees, but do you know how much your mutual funds really cost you every year?  Morningstar’s “Instant X-Ray” feature will break down your funds’ fees into hard dollar figures and compare them with the average costs of similar funds.  From there, you need to get rid of any funds with above-average expenses and are poor performing.  Replace them with low-cost index funds or exchange traded funds.

Next, you need to find a bargain broker.  The widely used online broker Fidelity does not have rock bottom commissions, but has a wide range of investment options.  They also supply a lot of research on their investments.  If you are looking to do a lot of the work yourself, you can go with bare bones operations like WellsTrade, which offers 100 free trades per year as long as you maintain a balance of at least $25,000.

And, finally, you need to haggle with your financial adviser.  The best time to negotiate your adviser’s fees is when  you are still shopping around.  But, if you have already settled, ask for a dollar-by-dollar breakdown of the exact fees you are paying.  At that point you can politely ask, “Is there anything we can do to lower the price tag”.  Now, if you pay by the hour, I would suggest doing a lot more research at home, have all of your questions thought out and written down, and come in with much of your paperwork done so that you will spend less time and money with your financial adviser.

Both mutual funds and hedge funds are managed portfolios, meaning that an investment manager picks the securities he or she thinks will perform well and groups them into a single portfolio.   Portions of the fund are then sold to investors who can participate in the gains/losses of the holdings.  The main advantage to investors is that they get instant diversification and professional financial management of their money.

Hedge funds, however, are managed much more aggressively than mutual funds.  They are able to take speculative positions in derivative securities such as options and have the ability to short sell stocks.  This will typically increase the leverage, therefor increasing the risk.  This also means that hedge funds have the ability to continue to make money when the market is failing.  Mutual funds, on the other hand, are not permitted to take these highly leveraged positions and are typically safer as a result.

Another big difference between these two funds is their availability.  Hedge funds are only available to a specific group of sophisticated investors with high net worth.  The government deems this group as “accredited investors”, and the criteria for becoming an accredited investor are quite lengthy and restrictive.  Mutual funds are very easy to purchase with any amount of money though.