Wednesday, July 9, 2008

Trim the Fat!

In times of an economic downturn we have to look at ways in which we can put more money back in our pockets. The business owner will try and add value to their business by engaging in cost-effective expense reduction strategies.

So, how does the average man or woman employ the same principals to reduce costs and add value to the financial products they hold?. How can the consumer add that extra bit of value to their pension/investment fund in times of low or negative returns?

The mantra from various Consumer groups is to either 'Switch and Save' or 'Shop Around', especially in relation to phone, insurance, mortgage and current account providers. To do this, we have to take more responsibility for the decisions we make by reviewing what we've got and doing additional research on what else is available in the market.

The same basic principles apply when focusing on charges on pension and investment products.

Consumers have to take a more active role in the decision making process and in the amount of research that they do. Apathy is not your financial friend.

By moving to a low-cost provider we are sending a strong message to financial institutions. It's time that they started 'trimming their own fat' by providing us with more cost-effective products. Who knows, it may even have a positive effect on the uptake of these products?

Businesses redirect cost savings to reduce debt or add value, why should it be no different for the end consumer of financial products?. Consumers could use the savings made to accelerate their mortgage payments or counterbalance increasing interest rates.

The cost savings from pensions and investments are different to other products in that they may be dependent on external factors.It is only after a prolonged period of time that the benefits are visible and by then, the damage may be done. The ideal time to focus on charges is before you sign the dotted line but that does not exclude you from reviewing what you already have .

No comments: