Many investors forget about the real cost of investing. If you don't think about your costs, you won't get a true picture of how your investments are performing. Even if the value goes up, you won't know which investments are actually making more money.
You may want to learn more about mutual fund fees through our Mutual Fund Fee Impact Calculator.
What has been my total cost to invest?
There's always a price to investing. Some of these costs are easy to see and understand. For example, each time you buy and sell, you get a confirmation slip from the investment company. It tells you what you bought or sold and what you may have paid in sales charges or commissions.
Other fees you may pay:
- Fees for financial advice
- Fees to manage regular investment accounts
- Fees to manage RRSP accounts.
Make sure you review and understand all the fees you have been charged. At the same time, think about whether you are happy with the service you are getting for those fees.
Understanding mutual fund fees
Costs of mutual funds are even harder to see. Mutual fund companies charge yearly fees to manage the funds you buy. They then charge a part of this fee to you each month. They call this a management expense ratio (MER). Your statement won't show these charges directly but they're a factor in your fund's rate of return. You can find out more about a mutual fund's fees in the fund prospectus.