Saving & investing
Investment fees: what those percentages cost
Separate growth, contributions and fees before comparing results.
The key idea
A small fee percentage is a recurring cost applied to a stated base. Ask which costs are already included in a reported return and which are extra. Lower cost leaves more of an otherwise identical return, but does not guarantee a better investment outcome.
Find the different layers
Costs can include account administration, advice or management, transactions and expenses inside a fund. Some are fixed dollars, others percentages. Ask for the dollar cost as well as the rate, how often it is charged and what service it pays for. OSC Investor Office: annual investment fee information
A management expense ratio (MER) describes recurring fund expenses as a percentage of assets. It is not necessarily every cost you pay. Check the product’s Fund Facts or ETF Facts, agreement and your own cost report; do not add a fee twice because it appears in two disclosures.
Gross and net are not interchangeable
A fund’s published return generally already reflects its embedded MER. Subtracting that same MER again understates the result. An independently quoted account or advice fee may be additional: verify the basis of each number. OSC Investor Office: mutual fund fee calculator explanation
For a fresh illustration, state a gross return and an explicit separate fee convention. Annual fees charged on a year-end balance, monthly asset fees and daily fund expenses do not produce identical arithmetic. Contributions also need a date.
Fees still matter when growth is weak
A fee can reduce a flat balance or deepen a loss. Comparing two prices is not comparing investment risk, holdings, service or suitability. A cheap investment can lose money. Avoid treating a constant assumed growth rate as a forecast, or an ending account value as spendable after-tax money.
See it in practice
One year, two fee assumptions
Assume $10,000 at the start, 4% gross growth, an annual fee on the balance after growth, then a $1,000 contribution at year end. No other charges, withdrawals, inflation or personal taxes. This simplified convention is not a fund calculation or the Lab’s monthly convention.
| Component | 0.5% fee | 2% fee |
|---|---|---|
| Start | $10,000 | $10,000 |
| Gross growth | $400 | $400 |
| Fee on $10,400 | −$52 | −$208 |
| Year-end contribution | $1,000 | $1,000 |
| Ending balance | $11,348 | $11,192 |
| Growth less fee | $348 | $192 |
Difference: $156. At zero gross growth, the same convention gives $10,950 and $10,800 after the contribution; investment growth less fees is −$50 and −$200. New deposits can make an account bigger even when its investments lost value.
Check your understanding
A return is already after the fund’s MER. Should you subtract the MER again?
No. First establish which fees are included. Deduct only genuinely additional costs under a clearly stated convention.
A useful next step
Ask your provider: What did I pay in dollars, what was included in returns, and what was additional? The Decision Lab uses a gross effective annual return converted to monthly growth, then a separate annual asset fee divided by twelve after growth/loss, with contributions at month end. It rounds money to cents and stays before personal taxes; it is not a fund-fee statement or retirement-withdrawal model.
Inspect the sources
Primary references checked September 18, 2026. A source check is not professional financial or legal review.
- OSC Investor Office: annual investment fee informationConceptual; checked2026 · Ontario regulator education; general fee concepts
- OSC Investor Office: mutual fund fee calculator explanationConceptual; checked2026 · Ontario regulator education
- OSC Investor Office: why risk mattersConceptual; updated January 2026 · Ontario regulator educational resource; general investment concepts