Mutual Funds

A habit is something that a person does often in a regular and repeated way. There are certain habits that can ruin your portfolio.

Make sure you aren’t following these habits:

1. Paying too much in fees. Mutual fund fees can ruin your portfolio. Always know how much you pay in fees. In a previous blog post I showed you how to figure out the true cost of owning your mutual funds.

2. Buying high, this applies both to stocks and mutual funds. When the stock market is riding high, everyone and t…

 Michael over at Michael James on Money recently posted a great article on the cost of your investments. Rather than looking at the top ten attributes of a great financial adviser, or top ten ways to invest, you should be able to answer this question first and foremost:

How much are my mutual funds costing me each year?

You can read the complete article here, however I’d like to share with the first two paragraphs from Michael’s blog post: “Despite my enthusiasm for do-it-yourself investing, I…

For every $10,000 you have invested in Mutual Funds more than one third is lost to fees. For every $10,000 invested you will lose $3,367.80 in 15 years*.

After 25 years the amount lost will be $5,613, more than 50% of your initial investment! Mutual fund fees take out a big portion of your earnings. The good news is that you can avoid these fees all together.

Can you imagine losing more than 50% of your investment to fees? It’s no wonder why so many people will have to work for the rest of the…

Most people invest in mutual funds, but do mutual funds make good investments? Could you be wasting thousands of dollars of your hard earned money?

Mutual funds are a popular investment tool made up of a pool of money combined by individual investors, organizations and companies. A manager invests and oversees the cash the collective group has placed into the mutual fund. Mutual funds are not insured by any federal agency, which means that the value could fall, and you may end up selling them f…

“The [sales] commissions encourage sales people to favour one product over another based on how much they will get paid, rather than what is in the best interests of the consumer”, says FAIR (The Canadian Foundation for the Advancement of Investor Rights).

FAIR recently issued an open letter to the Canadian Finance Minister to tackle high mutual fund fees which it says are harming Canadians’ ability to save for retirement. “The high cost of owning mutual funds impacts the ability of Canadians t…

In this example let’s take a look at $10,000 invested in mutual funds and $10,000 invested on your own, what I like to call the Simply Investing way.

Both methods are simple, in option #1 you simply handover $10,000 to your mutual fund advisor. In option #2 you simply deposit $10,000 into your trading account and purchase quality stocks when they are undervalued.

After 10 years which investment will be better? Take a look at the table above, and you can clearly see that the Simply Investing …

My Own Advisor has a great post this week titled “Why I Left the Mutual Fund Industry”. If you still own mutual funds, you owe it to yourself to read his post.

My Own Advisor also has a great link to a mutual fund fee calculator which you can use to estimate the true cost of your funds. In his example a $25,000 investment in the RBC Canadian Equity Fund would have cost just under $6,400 in fees! I’ve written about high mutual fund fees before, and I urge you to see for yourself by using the mut…

How do you tell financial advisors and product pushers apart? Is your financial advisor looking out for your best interest or their own? A recent article from Morningstar identifies 4 things to consider before working with a financial advisor. I’d like to add one more to the list:

Is the advisor living paycheck to paycheck?

In other words if the financial advisor isn’t wealthy himself, how can he or she help you to achieve financial success? Ask any potential advisor how long they have been fo…

Fees

1. Mutual funds charge a fee, the Management Expense Ratio (MER), to cover their expenses. An MER virtually guarantees that mutual funds will lag the stock market performance. In a previous post I discussed the high cost of mutual fund fees.

Selling at the wrong time

2. A mutual fund will drop in price if a large number of mutual fund holders decide to sell their funds in a short amount of time. This is especially worse during a market downturn, at which time everyone runs to their mutua…

Canadian Capitalist recently posted a great article about a recent Morningstar report that shows how bad mutual fund fees in Canada are when compared to other nations.

“The report found the median asset-weighted expense ratio to be 1.31% for fixed-income funds, 2.31% for equity funds and 0.80% for money market funds. These fees were the highest among the 22 countries in the survey for equity funds, third highest for fixed-income funds and tied for highest for money market funds. Morningstar fou…