By Brad Brain
Lately I have had some conversations that have had a similar theme. Unfortunately, the common sense that sparked the conversation has been, in many cases, obliterated by a dogmatic pursuit of something that seems like a good idea – seeking low fees on your investments.
I’m in no way advocating for high fees, but the microscopic analysis of fees on your investments really is getting too much attention relative to more important matters.
And often it’s undeservedly so. If your mutual funds happened to go down by ten percent, it wasn’t merely the fees that caused that. It was the markets.
If your mutual fund was down ten percent last year, its probably going to be because the market is off by ten percent, and similar mutual funds went down by about ten percent too. It’s just a question of whether they went down by 9.8% or 10.2%. Fees cause incremental changes to your results, they don’t drive your results.
Sure, incremental results are worth paying attention to, but the more important issue - by far - is owning the right investments in the first place, combined with your own behaviour as an investor. Get these things right and you now have the luxury of trying to seek incremental improvements. Botch these things, however, and the effect of fees on your portfolio will be drowned out by far more impactful forces.
Brad Brain. CFP, R.F.P., CIM, TEP is a Certified Financial Planner in Fort St John, BC. This material is prepared for general circulation and may not reflect your individual financial circumstances. Brad can be reached at www.bradbrainfinancial.com.