Updated: Sep 24
Investment fees are tricky little bastards. They usually don't appear on your statements and are instead, embedded inside your mutual fund and taken out of the funds performance. Why? THEY DON'T WANT YOU TO SEE IT! And, if your fund is progressively going up, you'll never notice!
Mutual funds and ETFs have an embedded fee called a Management Expense Ratio, or MER; think of a cat purring and replace the "P" with a "M" and drop the "ing", it's that simple. Essentially, this fee pays for running the fund, think salespeople, marketing, advertising, etc. And it's usually given as a percentage of the funds total value; .5%, 1%, 1.5% 2%...you get the picture.
How to find the MER?
Look at the fund's webpage. If it's not there, it's required to be shown in the fund's prospectus. If you're having trouble finding that, most likely, it's a HIGH PERCENTAGE! If I were a small percentage (which I'm not) I would want to be front and center showing myself off (which I usually do anyways).
So who cares?
On-going MERs or percentage fees eat at your funds performance like Harambe at the.....never mind. They compound! Just like the 'interest' you're praying to see compound, MERs can compound as well. Over a long period of time, you can be spending $100s, $1,000s, $100,000s just in fees! (Do you know how many trips to Golden Corral that kind of money will get you?!)
What can you do?
If you can't find the MER, don't buy it! Spend you time looking for true love on Tinder.
If the MER is above 1%, it's too pricey! Ain't nobody got time for that! Find a fund with a lower MER. Like fish in the sea, they're out there.
Buy ETFs (Exchange Traded Funds) or Index Funds. These funds do pretty much the same thing, they mirror a certain market or index, and usually cost wWwaAayYy LeEesSs as opposed to mutual funds.
Whatever you decide, make sure you do your homework. I know we're all learning remotely now but come on, do some research!
To learn more, check out the full article (source) https://www.millennial-revolution.com/invest/investment-fees-are-the-worst/