Many Australian charities and not-for-profits (NFPs) pride themselves on careful management of their organisations funds. Yet when it comes to investing, many are unknowingly handing over thousands in hidden fees, without seeing the returns they deserve.
The problem? Complex jargon, multi-layered fee structures, and a misplaced belief that “more expensive must mean better.”
At Stockspot, we believe that smart investing shouldn’t be complicated and confusing, or require high-priced advice.
The illusion of sophistication
It’s easy to be both impressed and confused in equal measure by complex terminology and investment strategies and asset allocations.These over-complicated terms often serve one purpose: to obscure complexity, justify high fees and create dependency.
In reality, most of these approaches don’t deliver consistent outperformance. In fact, research shows that simpler, low-cost strategies outperform the majority of actively managed alternatives over the long run.
The cost of complication
Many charities are unknowingly paying:
- Performance fees even when investments underperform
- Brokerage and advice fees stacked on top of each other
- Hidden margins that erode real returns
All of this adds up and the impact on your cause can be significant.
Consider this: Reducing your fees by 0.5% can make a significant difference in the long run. If you invest $100,000 this reduction could see you yielding an additional $22,500 increase after 10 years and nearly $600,000 after 30 years.
Reducing fees by just 0.5% can see you yield an extra $22,500 in 10 years
Reclaim control for your charity or NFP
By understanding the benefits of simple low cost investment strategies and seeing past the smoke and mirrors of flashy investment jargon, boards and investment committees can make more confident decisions, and keep more money working for their mission.
How to maximise your investment returns
Beyond simply trying to reduce fees, NFPs should be aware of some simple tactics they can implement to maximise their investments. These strategies highlight the importance of diversification and the automation of processes, like rebalancing.
We’ve also highlighted the 5 red flags charities and NFPs should watch out for.
