Hedge Funds can help investors make more money with higher-risk investments. Other techniques used in Hedge Funds include “leverage,” which is borrowed money to trade in addition to the capital provided one's investors. The usage of Hedge Funds also requires an incentive fee. An incentive fee is a fee based on a portion of the client's profits as opposed to a fixed percentage of assets. This fee is then invested and ideally will gain the investor more money.
Not sticking to your plan. The market has been up and down in recent years and this makes people very emotional with their investments and jittery about short-term losses, says Saar. The result for some has been to 'cash out' of poorly performing mutual funds. "If you established a proper, diversified plan when you invested, it is important to stick to it even through the dips in the market," says Saar. "The market may get bumpy but because the RRSP is a long-term investment, you should ride out these bumps. The plan accounts for fluctuations but should still reach its goal in the long run." Investors who contribute regularly to their plan are less impacted by swings in the market and can benefit from an investment strategy called dollar cost averaging.