When you go to fill up your car’s gas tank, most people check the gas stations on both sides of the street to see which one is charging 10 cents less per gallon. But when it comes to choosing an investment vehicle, those same people often entrust their most valuable assets to firms without a clue as to what they’re being charged.
Mutual funds, exchange-traded funds (ETFs), and other investments typically carry yearly service and management fees that, over the course of a 10-year period, can add up to thousands of dollars. There are management fees, service fees, advisory fees, even 12b-1 distribution fees (essentially marketing costs) — all buried so deep in a fund’s reports that the typical investor has no way to decipher how much they’re being charged.
With Personal Capital’s Investment Checkup, investors can get a look into exactly what they’re paying on each mutual fund or ETF. The total fees are automatically calculated and shown in big numbers at the top of the screen, giving users an easy-to-understand view into which funds are dragging them down with fees, and which are earning their keep.
Here’s how to do it: Log into Personal Capital and select the “Investing” tab at the top, then “Investment Checkup” from the drop-down menu. From there, click the “Costs” tab, and voilà! The grand total of what you’re paying in management and administrative fees on all of your mutual funds and ETFs are shown in bold. Below, each mutual fund and ETF is laid out with not only the fees paid per year, but also its value, tax-cost ratio, turnover ratio, and expense ratio — a number that wraps all those fees up and compares it to the total assets in the fund.
The Investment Checkup tool can crunch the numbers on all your management fees and expense-ratio costs, but it doesn’t yet deal with other hidden fees like trading costs and research fees.
Users can also graph out what their funds’ fees will cost them over a 20-year timetable. It’s a great way to find out if you’re paying much more than expected, or whether these funds will be worth their while in the future.
The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. You should consult a qualified legal or tax professional regarding your specific situation. Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.
Any reference to the advisory services refers to Personal Capital Advisors Corporation, a subsidiary of Personal Capital. Personal Capital Advisors Corporation is an investment adviser registered with the Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training nor does it imply endorsement by the SEC.