Author Topic: Reasonable MER?  (Read 1695 times)

Alf91

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Reasonable MER?
« on: July 21, 2016, 01:49:37 PM »
I am planning to start a TFSA for retirement savings and the fund I am looking at has a 1.07% MER - this is the lowest I have seen; is that reasonable or should I look for lower? Not sure what average MER is.

PharmaStache

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Re: Reasonable MER?
« Reply #1 on: July 21, 2016, 02:02:09 PM »
Is that a Tangerine one?

It's definitely not the lowest, but Tangerine is super easy for beginners to use. 

Have a look here to see other options with lower fees http://canadiancouchpotato.com/model-portfolios-2/

Alf91

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Re: Reasonable MER?
« Reply #2 on: July 21, 2016, 02:08:38 PM »
Yes, a Tangerine one. And I am most definitely a beginner!

I will check out that link, thank you.

Retire-Canada

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Re: Reasonable MER?
« Reply #3 on: July 22, 2016, 11:52:10 AM »
Not sure what average MER is.

These are the MERs for the 4 ETFS in my TFSA:

- 0.05%
- 0.15%
- 0.18%
- 0.19%

So ya I wouldn't pay 1% or more you are throwing away 0.81% - 0.95% of your returns away at 1%.

Say you invest $100K in two identical funds one with a 0.05% MER and one with a 1% MER. You get a return of 5% after inflation for 20yrs.

- 0.05% MER fund will end up with = ~$263K

- 0.1% MER fund will end up with = ~$219K or cost you $44K more to own than the 0.05% fund

FWIW - using a brokerage like Questrade is not hard if you are just buying ETFs. When you look at the $$ you will save it's worth spending an hour or two to figure it out.

« Last Edit: July 22, 2016, 02:09:45 PM by Retire-Canada »

Space Pickle

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Re: Reasonable MER?
« Reply #4 on: July 23, 2016, 01:29:14 PM »
Do you use Questrade, Retire-Canada? I have been thinking of starting to invest...initially I was looking at the Tangerine index funds but now I'm interested in ETFs with Questrade.

Retire-Canada

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Re: Reasonable MER?
« Reply #5 on: July 23, 2016, 05:48:43 PM »
Do you use Questrade, Retire-Canada? I have been thinking of starting to invest...initially I was looking at the Tangerine index funds but now I'm interested in ETFs with Questrade.

Yes I use QT. It's free to buy ETFs so I can add each month to my investments with no cost and my Vanguard ETFs are low MER as noted above.

It's real nice not to be hosed by my investment/advisor fees for a change. QT is not hard to learn how to use. You don't have to be a very experienced or knowledgeable investor to buy and hold ETFs.

forummm

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Re: Reasonable MER?
« Reply #6 on: July 23, 2016, 05:53:18 PM »
1% is super high. Generally 0.2 is around the highest you should go. But better to be more like 0.05.