Low‑Fee Investing Made Simple

If you’re tired of watching your returns get eaten up by fees, you’re not alone. Most investors don’t realize how much a tiny percentage can hurt their portfolio over time. The good news? Cutting fees is easier than you think, and you don’t need a finance degree to do it.

Pick the Right Vehicles

Start with the basics: choose funds that charge low expense ratios. Exchange‑traded funds (ETFs) and index funds are the go‑to options. An S&P 500 index fund often costs less than 0.05% per year, while a actively managed mutual fund can charge 1% or more. The difference adds up fast. Look for the expense ratio in the fund’s fact sheet and aim for anything under 0.20% if possible.

Don’t forget about commission‑free platforms. Many Canadian brokers now let you trade ETFs without a per‑trade fee. That means you can rebalance or add new positions without extra costs. If your broker still charges per‑trade fees, consider switching to one that offers zero‑commission trades.

Avoid Hidden Costs

Fees aren’t just the expense ratio. Some funds have hidden charges like transaction fees, bid‑ask spreads, or even account maintenance fees. Check the fund’s prospectus for any “12b‑1” fees, which are marketing fees that can creep up over time. If you see a $10 monthly account fee, ask your broker if there’s a fee‑free tier for larger balances.

Another sneaky cost is the bid‑ask spread on ETFs. When you buy, you pay the ask price; when you sell, you get the bid price. The spread is usually small for big, liquid ETFs, but it can be wider for niche funds. Stick to high‑volume ETFs to keep that spread minimal.

Lastly, watch out for tax inefficiencies. Some funds generate a lot of capital gains, which are taxed each year. Low‑turnover index funds typically produce fewer taxable events, leaving more money in your pocket.

By focusing on low‑expense ratios, commission‑free platforms, and transparent fee structures, you can shave a significant chunk off your investing costs. The money you save stays in your account, compounding over the years and helping you reach your goals faster.

Ready to cut fees? Start by reviewing the expense ratios on your current holdings, switch any high‑cost funds to cheap alternatives, and make sure your broker offers a fee‑free trading option. Small changes now can make a big difference later.