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Why Fees matter

Fund fees have become a contentious topic in the last few years as people have become more aware of them and alternative low-fee options have become more available.
Fees aren't everything when it comes to investing. You need to consider what you are invested in and the services that are provided outside of the investment. That being said, fees can play a significant role in your investments.
Let's say you invest into a sector with an expected return of 7.5%.
You have 2 fund options to get into that sector, one is a mutual fund with a 2.5% total fee (net 5% return) and the other is an ETF with a 1.5% total fee (net 6% return). If someone was to invest $100 monthly from age 25 to 65 with these condition you would see:

ETF (fee 1.5%)
Mutual Fund (fee 2.5%)
Difference of -
$200,244
$153,337

$46,906       (per $100 monthly invested)

​This is by no means what is actually going to happen, but this is why fees should always be considered. You should ask what the fee is and what the average fee for a fund in the sector is.

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  • Financial Planning
    • Our Approach
    • What is Financial Planning?
    • Tax Preparation
    • Cost of Modern Investing
    • Types of Planning >
      • Retirement Planning
      • Tax Saving Strategies
      • Budgeting Basics
      • Insurance Planning
      • Estate Planning
    • Investment Blog
  • Investments
    • What is Investing?
    • Passive vs. Active Investing
    • Why Fees Matter
    • Different Types of Investments >
      • Exchange-Traded Funds ( EFTs )
      • Segregated Funds
      • Mutual Funds
      • Real Estate
  • Insurance
    • Why do I need Insurance?
    • Types of Insurance >
      • Life Insurance
      • Critical Illness Insurance
      • Disability Insurance
      • Health Insurance
      • Long-Term Care Insurance
    • Group Benefits
  • Contact