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Mutual Fund Investors Face Huge Redemption Fees |
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Don’t use deferred sales charge mutual funds
Millions of Canadians use them and the investment industry loves to sell them, but deferred sales charge funds hide a nasty secret if you try to sell.
Few consumers know that redemption fees are charged on the original amount invested, not the current market value. The math is brutally simple. If you invested $10,000 in the past year and it declined to a value of $8000, the redemption fee of 6% of $10,000 equals $600 or 7.5% of your remaining capital.
The best options for mutual fund investors are front-end load funds at zero commission up front. These have no redemption charges and usually carry lower management fees.
“Advisors may try to charge you commission on these funds, but politely decline. They are very optional.”
Garth Rustand, Executive Director |
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