The Management Expense Ratio (MER) is the total annual cost of owning a mutual fund or ETF, expressed as a percentage of your average investment, covering management, operating, and administrative expenses, which is automatically deducted and significantly impacts your net returns, so lower MERs are generally better.
A good expense ratio, from an investor's viewpoint, is around 0.5% to 0.75% for an actively managed portfolio. An expense ratio greater than 1.5% is considered high.
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.
In Canada, a good MER for an exchange-traded fund (ETF) is usually around 0.25% to 0.75%. A MER above 1.5% is usually considered high, and some MERs are higher than 3%.
MER's are calculated twice per year. A fund's MER is its total management fees and operating expenses for the 6-month or 1-year period respectively expressed as an annualized percentage of its average assets over that time period.
In summary, if you're paying for an actively managed fund at a bank branch where you receive support from a financial advisor or planner, you can expect to pay an MER of 1.8% or more. If you open a brokerage account and invest directly in a passively managed ETF, you can expect to pay an MER of roughly 0.25%.
The formula is: MER = Total Revenue ÷ Total Marketing Spend. For example, if your ecommerce store generated USD 100,000 in total revenue and your total marketing spend across all channels was USD 20,000, here's how you'd calculate: MER = USD 100,000 ÷ USD 20,000 = USD 5.
With careful planning, $2.5 million can fund a comfortable retirement starting at age 60. But as with any major life transition, retirees must weigh a complex set of variables from taxes to healthcare to ensure their nest egg lasts decades.
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.
Managers will hold firm on pricing for successful funds, but will be far more flexible for funds struggling to attract inflows. This means that an existing investor in a struggling fund can often negotiate lower fees, on the back of the manager's fear of losing a client.
A fund with a high expense ratio could cost you 10 times — maybe more — what you might otherwise pay. Typically, any expense ratio higher than 1 percent is high and should be avoided. Over an investing career, a low expense ratio could easily save you tens of thousands of dollars, if not more.
The "3-5-10 Rule" in mutual funds refers to regulatory limits under the Investment Company Act of 1940, preventing excessive investment in other funds (fund-of-funds) by restricting an acquiring fund from owning more than 3% of another fund's stock, investing more than 5% of its assets in any single fund, or more than 10% in all other funds combined. While these are core limits, the SEC introduced Rule 12d1-4 to allow for more complex fund-of-funds structures with specific conditions, easing some restrictions, particularly for ETFs and BDCs, say law firms and U.S. Bank.
Warren Buffett's 8+8+8 Rule — A Lesson for Every Professional This rule reminds us of the importance of balance in our daily lives: 8 hours for work, 8 hours for rest, and 8 hours for personal time. This principle highlights the value of employee well-being, productivity, and sustainable performance.
If you lower the bar to $1 million in retirement savings, only 2.5% of households cross that line. Among actual retirees, it's just 3.2%. So while the $2 million dream makes headlines, very few actually live it.
At 55, a strong benchmark is a net worth of roughly $364,000 (median) to over $1.5 million (average/upper tier), depending on data source, with income-based rules suggesting 4.5 to 8 times your annual salary, but your personal goal depends on retirement timeline, lifestyle, and debt. Focus on increasing savings and reducing high-interest debt during these peak earning years, with home equity and retirement funds often being major components of wealth at this age.
Assuming long-term market returns stay more or less the same, the Rule of 72 tells us that you should be able to double your money every 7.2 years. So, after 7.2 years have passed, you'll have $200,000; after 14.4 years, $400,000; after 21.6 years, $800,000; and after 28.8 years, $1.6 million.
The marginal revenue formula calculates the additional revenue generated from selling one more unit of a good or service. It is expressed as: Marginal Revenue (MR) = Change in Total Revenue ÷ Change in Quantity Sold.
Average Fees in Canada
Money market funds (funds investing in bonds maturing in less than a year) tend to have the lowest MERs typically ranging from 0.5% to 1%. Actively managed equity funds will have the highest MER of about 2% to 3%. Historically Canadian mutual funds have very high MERs.