A good Marketing Efficiency Ratio (MER) is typically 3.0 or higher (meaning $3+ revenue per $1 spent), but the ideal ratio varies by industry, business model, and growth stage; for e-commerce, 5.0+ is often great, while for SaaS or new businesses, it's more nuanced, but a lower MER generally indicates greater efficiency in turning ad spend into overall revenue, unlike channel-specific ROAS.
However, keep in mind that a low MER doesn't necessarily mean more money in your pocket. For example, you'll make more on a fund with a 10% return and a 2% MER than you will on a fund with a 6% return and a 1% MER. Sometimes you may have to pay a higher MER to get better management and a higher return.
If you are looking for comprehensive financial management, in general you should expect to pay about 1%. The second is a representative fee for a well-indexed S&P 500 fund. If you are only looking for investment management, someone to grow your portfolio, this is the number they need to compete with.
The 3-5-10 rule for ETFs refers to regulatory limits under the Investment Company Act of 1940, restricting how much one fund (an "acquiring fund") can invest in another (an "acquired fund"), meaning no more than 3% of the acquired fund's voting stock, 5% of the acquiring fund's assets in one fund, and 10% of the acquiring fund's total assets across all other investment funds. While some unofficial investor guidelines use similar numbers (e.g., expense ratios, turnover), the official 3/5/10 rule is a strict SEC rule preventing excessive "fund-of-funds" investing to protect investors from layering fees and risks.
Premium vs NAV: If the ETF is trading consistently above its Net Asset Value (NAV), it might be overpriced. Check whether the market price significantly exceeds NAV, especially if that premium is growing. Intraday Indicative Value (IIV): Compare the IIV or the real-time estimate of the ETF's value to its trading price.
The 7-3-2 rule is a financial strategy for wealth building, suggesting it takes 7 years to save your first major financial goal (like a crore), then accelerating to achieve the next goal in 3 years, and the third goal in just 2 years, leveraging compounding and disciplined, increased investments (like a 10% annual SIP hike). It highlights how returns compound faster over time, drastically reducing the time needed for subsequent wealth targets, emphasizing patience and consistent, growing contributions.
How can you avoid high MER fees?
Remember to harness the power of compound interest, invest in what you understand, remain unswayed by market sentiment, diversify your portfolio, stay invested for the long term, maintain emotional discipline, and continuously educate yourself.
50% of income for essential needs. 30% for lifestyle wants. 20% for savings and investments.
A 2019 study by Harvard Business Review found either Vanguard, BlackRock or State Street is the largest listed owner of 88% of S&P 500 companies. There is a perception that a few select companies own a vast majority of the stock market.
Additionally, it's important to note that if you plan to hold your ETFs for one year or less, the gain or loss is considered to be short-term and taxed as income. If you plan to hold your ETFs for more than one year, then your gain or loss is considered long-term and is taxed at a more favorable rate.
The "110% rule" generally refers to two different concepts: an IRS safe harbor for avoiding estimated tax penalties, requiring high-income earners to pay 110% of their previous year's tax, and a investment guideline (Rule of 110) suggesting subtracting your age from 110 to find your stock allocation percentage; it can also refer to Florida property tax rules for rebuilding homes, allowing 110% square footage at old valuation after disasters. The most common tax context means if your Adjusted Gross Income (AGI) was over $150k, you must pay 110% of last year's tax via quarterly payments or face penalties, while the investment rule suggests a portfolio mix like 70% stocks for a 40-year-old (110-40=70).
From what I've seen, a few signs stand out: There was a major merger or acquisition involving your investment advisor. You've had internal changes - the people that made prior decisions are no longer there (or there are about to be significant transitions) Performance has been unexplainable and/or consistently bad.