Mutual funds are very popular and with very good reason, they offer significant advantages including but not limited to: professional portfolio management, instant diversification, opportunity to invest in foreign and domestic markets, low minimum investments, liquidity, and choice.
These advantages however do come with a cost. Many investors don’t realize they pay fees to purchase and hold mutual funds because the fees are usually built into the price of the fund. Although these costs are disclosed in the prospectus, many people don’t bother to read it.
Click here for a detailed breakdown of all the costs involved with investing in mutual funds, including the management expense ratio (MER) – which includes various fees and operating expenses – and other costs.