Invest Skeptically

Today’s blog is about mutual fund fees. More specifically, the following are some links from other people on the internet ranting about how evil they are.

Here’s a column by Robert Kiyosaki at Yahoo! Finance, here’s another, and another, by Duncan Hood at Canadian Business Online, and here’s one by John Chow the famous blogger and self described dot com mogul. I also found this nifty interactive pie chart at SmartMoney.com.

Here in Canada, we pay some of the highest mutual fund fees in the developed world. Larry MacDonald at Canadian Business offers one potential explanation that “mutual funds are a joint product of which the fund is the visible part and the peripheral services [i.e. the financial planning advice] are the less visible part”. At any rate, I agree with the above authors that mutual fund fees are generally just bad.

The conclusion: consider opening a discount brokerage account and replacing mutual funds with low-cost ETFs (exchange traded funds). Challenge financial advisors who recommend an all mutual fund approach to investing.