I recently read Larry Bates book “Beat the Bank: The Canadian Guide to Simply Successful Investing” and was very impressed by how well Larry lays out just how destructive fees can be to your investment returns. The book discusses the three wealth builders (savings rate, rate of return, and time) as well as the three wealth killers (taxes, inflation, and fees).

Larry discusses just how damaging the last wealth killer can be to your portfolio over time. As a former banker he has seen first hand how badly fees can eat away at your retirement nest egg and notes how many Canadian investors don’t even realize they are paying fees on their mutual funds. The book introduces the idea of a T-rex score which is basically a measure of how much of your gains you give up over time when you are paying high fees. There is a great calculator on his website larrbates.ca that allows you to put in the parameters of your investments to see just how much of your hard earned returns you are giving up to the bank.

It’s not all doom and gloom however, there are a growing number of low cost ETFs, robo advisers and online brokerages the allow Canadians to access investments while keeping a much larger share of the investment returns for themselves. By learning the effect fees can have on your portfolio and the options available you can be in the best position to grow your nest egg and reach financial independence.   

This book helped me to open my eyes to how detrimental investment fees can be to your financial freedom, and caused me to look at and examine my own investments. For anyone who is wondering if they are paying to much, or want to know more about the damaging effects of fees on their investment I highly recommend picking up a copy of his book.