We consider the effects of the diminished returns due to transaction costs, account management fees and tax liability is much higher than most investors realize.
Controlling one’s costs is vital to producing attractive investment outcomes. Simple math’s reveal that often, market return minus costs gives net investor return. So, by effectively reducing costs, net investor returns can be dramatically increased. The issue is, the majority of investors simply do not realize to what extent fees are being incurred on their investments and therefore decreasing likely returns. This is crucial because a difference of 0.5% in annual fees, for example, can make a significant difference to your returns over the long term and in some instances equate to hundreds of thousands of dollars.
In some countries, regulations restrict the international investment opportunities of citizens. Many investors feel that such restriction hinders the establishment of a truly diversified investment portfolio. Offshore accounts are much more flexible, giving investors unlimited access to international markets and to all major exchanges. On top of that, there are many opportunities in developing nations, especially in those that are beginning to privatize sectors that were formerly under government control. China's willingness to privatize some industries given rise to countless opportunities looking to benefit from the world's largest consumer market.