Here’s a Shocker! Exceptionally High CDN Mutual Fund Fees

Posted by Alex via Questrade

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  • 0576.featured large.png-550x0Canadians pay some of the highest mutual fund fees in the world
  • The opportunity cost of investment fees impact your portfolio
  • Small fee reductions can mean big portfolio growth

Cage match: how do your mutual funds perform?

Let’s look at two different funds invested in the same securities, returning an average of 6% per year before management fees. For the purposes of these calculations, we will be using the mutual fund fee calculator from GetSmarterAboutMoney.ca.

If you start with a portfolio of $100,000 and contribute $10,000 a year, how much does the higher fee fund cost you over 25 years?

Fund #1

Fund #2

Initial investment

$100,000

$100,000

Annual investment

$10,000

$10,000

Average return before management fee

6%

6%

Management fee

2.42% per year

0.77% per year

Average return after management fee

3.58% per year

5.23% per year

Total after 25 years

$624,603.50

$840,363.04

Investing in the fund with the lower fee means your portfolio is almost a quarter of a million dollars larger than it would be if it was invested with the fund with a larger fee. The same amount invested; the difference in returns is an incredible $215,759.54.

…read the whole article HERE