Too many Canadians pay little attention to their investments. A 2016 study by Tangerine Investments found that 38% of Canadians surveyed claimed they paid no fees, while another 11% were not sure if they paid fees at all. Yikes!
The reality is that Canadians pay some of the highest fees in the world. That’s more than tragic. Those high fees can eat up half of your investment wealth over a lifetime.
I invite you to check out the effect of fees on returns on Larry Bates’ site. He’s the author of Beat The Bank. Click on this link to get your T-Rex Score. That will give you the bad news on how much money you are putting in the wrong pockets.
Houston, we have a problem (that’s Houston, B.C., of course). Fortunately there are many simple low-fee options available in Canada. Problem meets solution.
High fee investments, you’re about to meet your maker. But don’t go out and book your grave site plot just yet. I am guessing that this will take a while. You cannot turn around a massive ship on a dime. But we’ll turn it around one investor at a time. And while we turn things around, perhaps the higher fee industry will take notice and adjust course as well, cutting management expenses and offering some lower fee options. Wishful thinking?
It’s not just about the lower fees for the sake of lower fees. The fees “come from” the returns of the portfolio. Plus …
Every dollar you spend on investment advice is a dollar you cannot invest.
Fee-for-service advisor Ross Berlin.
98% Off Sale!
The theory goes that if you can pay less in fees, more is available for returns. And well, it’s not just a theory. A recent SPIVA study showed that over a 15 year period 98% of actively managed mutual funds underperformed the passive index benchmark. Instead of owning Canadian stocks in a fund for 2.0% – 2.5%, an investor can buy a Canadian stock market index ETF for .05%. That’s one half of one tenth of 1%. That’s a fees savings of some 98%. Imagine if your car insurance broker came to you and offered insurance that costs 98% less. You might jump at that opportunity. But when it comes to investments you decide to stick with the higher fee options?
4 cost-cutting options
You can create an ETF Portfolio.
VIDEO: Building the simple but effective ETF portfolio.
Even better for many, there are all-in-one asset allocation ETFs. Those are very well diversified global ETF portfolios with fees in the range of 0.20% to 0.25%.
If you want a lower fee managed portfolio with advice you can go with a Canadian Robo Advisor.
And certainly, it’s easy to build the simple stock portfolio.
It’s time to cut the crap. It’s time to cut the fees. It may be time to say goodbye to your advisor who told you not to worry about the fees you pay. Or like many Canadians you might not be able to get a straight answer on the fees that you pay. As an advisor at Tangerine Investments I performed Portfolio Analysis for Canadians. I witnessed the disastrous effects of high fees and poor or no advice. It’s time to keep more of your money in your portfolio pocket. Lower fees might help us reach our financial goals sooner. Lower fees might help us enjoy a much more prosperous retirement.
You’re not alone. Many in the lower fee investment community are willing to help. Drop me a note, click on Contact Dale at the top of this page. I am happy to help, for karma.
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