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This 1 thing could kill your investment returns

The share market is by far the best place to have your money invested over the long term.

The problem is that there is a cost to do any sort of investing. If you invest in any ASX-listed share you will need to pay for the brokerage.

If you buy an investment that is managed then you will be charged an annual management fee and perhaps an outperformance fee if the manager beats the benchmark.

Unlisted investments can also cost you when you buy into and sell out of the investment. This is called the buy and sell spread and is equivalent to paying for the brokerage.

A lot of active managers charge investors at least a 1% management fee per annum. This can have a compounding effect of reducing returns.

If investment returns between two options are similar before fees then you want to choose the investment with the lowest fees. Options like the Vanguard US Total Market Shares Index ETF (ASX: VTS), Australian Foundation Investment Co. Ltd. (ASX: AFI) and iShares S&P 500 ETF (ASX: IVV) all have very low costs.

Fund managers such as Perpetual Limited (ASX: PPT), Platinum Asset Management Limited (ASX: PTM) and BT Investment Management Ltd (ASX: BTT) all have to achieve returns in excess of the market after fees in order to justify their higher fees. Perhaps if the Australian economy were to falter then individual stock pickers would have a much stronger result.

I am very impressed with one particular fund manager who manages to beat the market over medium-term and long-term time periods no matter what the market does. WAM Research Limited (ASX: WAX) is one of those listed investment companies.

Foolish takeaway

I think the best way to simultaneously achieve market-beating returns whilst having low fees is to invest in shares yourself. Focus on shares you can see yourself holding for more than five years.

Shares that could be great ones to hold for the long-term are Challenger Ltd (ASX: CGF), Ramsay Health Care Limited (ASX: RHC) and InvoCare Limited (ASX: IVC).

Here are a few more examples of some of the great stocks that could be the best ones to invest in.

Top 3 ASX Blue Chips To Buy In 2017

For many, blue chip stocks means stability, profitability and regular dividends, often fully franked..

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool's in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool's Top 3 Blue Chip Stocks for 2017."

Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.

If you're expecting to see the likes of Commonwealth Bank, Telstra and Wesfarmers shares on this list, you'll be sorely disappointed. Not only are their dividends growing at a snail's pace, their profits are under pressure too due to the increasing competitive environment.

The contrast to these "new breed" blue chips couldn't be greater... especially the very real prospect of significant share price gains, something that's looking less likely from the usual blue chip suspects.

The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand - and how quickly the share prices of these companies moves - we may be forced to remove this report.

Click here to claim your free report.

Motley Fool contributor Tristan Harrison owns shares of Challenger Limited, InvoCare Limited, Ramsay Health Care Limited, and WAM Research Limited. The Motley Fool Australia owns shares of Challenger Limited and Platinum Investment Management Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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