Fees Fees Fees!

This is the third week we’ll be addressing ideas to protect your portfolio and your assets during the market downturn. The last blog was a discussion about leveraging tax losses in your portfolio, and the prior week’s was a reminder not to liquidate your portfolio, stay in the market! This week, we’ll talk about reducing fees in your portfolio.

There is never a bad time to reduce fees. Fees are an unavoidable evil of investing, but that doesn’t mean an investor has to overpay when it comes to them. For actively-managed portfolios invested in mutual funds, as most bank managed portfolios are, fees can each over 2% per year. On a $100,000 portfolio, that means $2,000 of the portfolio is eaten by fees. While this is the same during a market bull run, this will feel a little more painful during a market free fall.

No doubt you have seen advertisements in various media for Wealthsimple, Questtrade and others. They use exchange-trade funds (ETF’s) and index funds to mirror and match the performance of the overall market. This is called passive investing. Passive investing generally comes with much lower investing fees, usually in the range of .25%-1% of assets. Cutting fees gives your portfolio a chance for better performance – you can’t control market outcomes, but you can control the fees that you pay!

Fees are a common topic to discuss around investing – but that is because it is so important. Fees will eat into your gains and make your losses even larger. Investors should be doing everything they can to reduce fees, while making sure they are receiving good service from the people they are paying. Reach out to Stride Business Works for a portfolio consultation, and find out how much you’re paying in fees!