Over the course of an investor’s life, mutual fund fees can end up costing the average Canadian household $323,654.50, says digital wealth manager Nest Wealth.
“Put in context, the average Canadian household will spend $80,000 more on investment fees than they’ll spend to raise their child to the age of 18,” says Randy Cass, founder and CEO of Nest Wealth.
Nest calculated the fee by assuming an investor who starts saving at age 25 with a $10,000 initial investment. Each year for the next 39 years, she adds $5,800 to her investments. At age 65, she starts withdrawing either $22,000 a year, or 3.5%, whichever is greater. Nest presumed a rate of return of 6.5% and used a 2.35% annual fund fee. Morningstar data shows 2.35% is the average equity mutual fund MER in Canada.With those rates, the average balance of the investor’s account over the investment lifetime is $229,000, while the fees she pays are $323,654.50.
Nest Wealth has a Canadian fund fee calculator investors can use to see how their fees affect their savings by translating a MER into into a dollar figure.The fees have been compiled by Fundata, and they include Canadian funds that have been open for at least a year. If you look up multiple funds at once, the calculator will tally total fees across investments.
The tool makes it easy to quickly look up competitors’ fees — something that may come in handy as more of your statements include dollar figures to comply with CRM2.