Check out how fees can dwindle your hard earned cash

Investment funds, including mutual funds, charge a fee for managing the fund. The fees are called the management expense ratio (MER).

The MER:

~may include an ongoing commission paid to advisors who sell the fund (also known as a trailer fee)

~is paid regardless of whether the fund makes money

~is deducted before calculating the investor’s return

~is set at a percentage of the fund’s value

~The percentage varies depending on the fund. This can be from less than 1% to over 3%.

For example, you may have a fund with an annual return of 5%. If the fund’s MER was 3%, your net annual return would be 2%

Total investment ($1,000 a year over 20 years) $20,000 $20,000 $20,000
Annual return (before MER is deducted) 5.0% 5.0% 5.0%
MER 3.0% 1.5% 0.5%
Net annual return (after MER) 2.0% 3.5% 4.5%
Fund value after 20 years2 $24,783 $29,269 $32,783
Difference from fund A n/a +$4,486 +$8,000

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