I was aware from media reports that some investment management companies were greedy when it came to fees. Not just in Canada. Since my investment managers didn’t have to report out what they were charging me in actual dollars — only percentages — it was hard to calculate.
That’s changed. In Canada, they now (as of last year) have to report the dollar figure.
I presently invest with two companies. I’m dumping both in the coming weeks.
One company, I’ll call company X, reported the fees in a statement I received late last year. The amount I paid to X in fees was shocking, but not unreasonable, according to the independent money coach examining my finances.
I can’t find a statement for the second company, I’ll call company Y, a chartered Canadian bank. Its fees, according to my money coach, are way out of line with what’s reasonable.
I’ve only got myself to blame for not being more diligent about finding credible companies with good returns and lower fees. I’m not rich and don’t have an inheritance coming my way. I don’t own a piece of Vancouver’s inflated real estate I can cash out later, as many of my friends are hoping to do. All I have is what I’ve earned.
I’m making a change. My hope is that in a few years I’ll have saved enough to cover the costs of what I paid my independent money coach.
So, here’s what I didn’t understand about investment management fees on mutual funds. What’s the percentage amount that’s starting to get a bit too high.
I’m not a financial or investment expert, but I’ve spoken with a few in recent weeks. (As well, I was a journalist for decades so consider what I’m about to say straight reporting!). The figure, I’m told, is over two (2) percent.
The firms I’m looking to move to charge in the 1.5 to 1.8 percent range. I’ve been paying a lot more at company Y.
Have a look at your investments. If you’re invested in any funds that cost more than two percent in management fees, it’s possible you’re paying too much. But, that’s for you to decide. You may be getting out-of-this-world returns on your investment with the fund/company you’ve invested with. The service you’re getting may be worth the fees you’re paying.