For my kin: MER and other mutual fund fees.

When buying mutual funds always check the MER. Now, what is MER and why should you care?

According to RBC Global Asset Management: The MER is the total of the management fee, operating expenses (or administration fee) and GST/HST charged to a fund each year. It is expressed as a percentage of a fund’s average net assets for that year. All mutual funds and ETFs have an MER.

If a fund gained 4% last year but paid a MER of 3%, you, the investor in the fund, would realize a return of only 1%. If two funds are identical except for the MER, the one with the lower MER returns more to the investor.

D-series TDB3088 has a MER of 1.19 while TDB972 has a 2.02 MER.

TD offers some funds as both investor series funds and as D-series funds. The D-series funds are only available to investors with self-directed investment accounts. Funds in the D-series have lower MER charges compared to the comparative I-series version.

Recently, I compared five funds. All funds opened with an original investment of  $10,000. Note: the two Dividend Growth funds are identical except for the series. One is an investor series while the other is a D-series.

The D-series fund has a MER about 0.8% less than the very similar I-series fund shown.

The D-series fund returned $285.48 more to the investor than its I-series counterpart. That's a nice reward for buying and selling your funds directly without the aid of a middle man at the bank.

TD Dividend Growth Funds compared: fund with lowest MER performs best.

A general rule: always pay as little MER as possible.

What else should one watch for when buying mutual funds? Answer: sales commissions, known as loads. Try and only buy no-load funds which have no sales commissions added when being purchased or sold. I try to stay clear of both front-end load and back-end load funds as both increase costs.

Is that it? No. Generally, mutual funds are not sold for quick trading. If mutual fund units are sold too soon after purchase, a short-term trading fee is charged. This fee deters quick and frequent trading of funds and the associated trading fees a fund would accrue. How soon is too soon? Usually, one must hold a mutual fund for a minimum of thirty days to avoid short-term trading fees but check this and confirm with each individual fund.

Lastly, there are a few funds designed for short-term investing. An example would be TDB8150. I once thought of TDB8150 as a money market fund. I was wrong. TDB8150 is an investment savings account mutual fund with absolutely zero fees. It currently is pays 2.30% with no MER. It has a fixed unit price of $10 but the initial investment must be $100 or more. There are no buying and selling fees. And it is CDIC insured up to total investment of $100,000 per account. Deposits to TDB8150 are limited to $5 million (Canadian).

I did a full take on TDB8150 but I say little more than I do in this post. Here is a link: TDB: My favourite spot for parking cash.