Mutual Funds

How Much Are Your Investments Costing You?

By Kanwal Sarai
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Do you own any Mutual Funds, ETFs, or Index Funds? If so, do you know how much you pay in fees each year?

What is the fee?
Each of the investment products I listed above have fees. The fund company has to employ fund managers and staff, has to pay for office space, marketing, and advertising. As a fund investor you have to pay for the cost of running the fund. This fee is called the Management Expense Ratio (MER), and is easy to find out how much you are paying.

Mutual Fund Fee Calculator
Follow these two steps to figure out how much you are paying in fees:

1. Look at your most recent fund statement, it should list the MER. If not, check the fund's website.
2. Use any of these Mutual Fund Fee Calculators to determine your cost:

Calculator 1 (Canada)
Calculator 2 (USA)
Calculator 3 (Australia)

I'll use the following 3 mutual funds as an example:

Franklin Global Growth Fund (MER 2.57%)
TD Monthly Income Fund (MER 1.46%)
Vanguard High Dividend Yield Index (MER 0.15%)

What are the fees?
$25,000 invested in each of the above funds for 10 years will cost you:

$8,877.07: Franklin Global Growth Fund
$5,043.00: TD Monthly Income Fund
$518.12: Vanguard High Dividend Yield Index

Even higher fees?
The fees are even more staggering as your portfolio continue to grow, with $250,000 invested in each of the above funds for 15 years your cost will be:

$161,453.97: Franklin Global Growth Fund
$91,720.93: TD Monthly Income Fund
$9,423.38: Vanguard High Dividend Yield Index

Save your fee
Why not save the $161K or even the $9K in fees and invest by yourself? Don't let the industry fool you into thinking that investing is complicated. Investing is simple and anyone can learn how to invest responsibly and stopping paying the MER fees.

The Solution
The Simply Investing course is the easiest, fastest way to learn how to obtain financial freedom through dividend investing. But you don't have to take my word for it, read testimonials from others just like yourself who have started to invest successfully on their own.

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Showing 2 comments
  • Reply

    Totally agree Kanwal. A diversified portfolio of dividend stocks can be built and maintained for almost free or at least a very low percentage as compared to mutual funds and some ETFs. It also gives the investor more control to minimize capital gains taxes. Tom

    • Kanwal Sarai
      Reply

      Thanks for your comments Tom. A low MER probably doesn’t affect people too much when they have $5K, $10K, or $20K invested, but when you exceed $250K, $500K, or even $1M those MER fees certainly add up to a lot of money.

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