Throughout your career you put a lot of energy into saving for retirement. So when the time comes to dip into your RRSP, make sure you get the most out of it! It's important to pay attention to all the different fees that can shrink your nest egg. Here are 6 tips to help you pay the lowest fees possible during retirement, so you can get more out of your hard-earned savings!
01Make a list of all fees that you pay
To pay the fewest fees possible, you need to start by knowing what you are paying. The prospectus or the fund facts of each of your funds will provide you with all the information you need to correctly determine the fees you need to pay. If you don't have the prospectus, contact your financial institution.
What is the Management Expense Ratio? Are your funds redeemable at all times? Are there redemption or withdrawal fees? What are the transaction fees? All this information will help you determine where you can save on fees as much as possible so you can hold on to more of your money. You can even compare with similar products from other financial institutions. You might be in for some surprises!
02Redeem your funds at the right time
Although purchase fees have fallen out of favour on the Canadian investment scene, the vast majority of funds have fees payable upon redemption, which come into effect whenever you withdraw money.
Fortunately, these fees quite often decrease progressively as the years go by. That means it might be worth your while to hold on to certain funds and make withdrawals from other holdings to avoid paying fees.
Otherwise, if this type of fund no longer meets your investment needs, you can always convert it to a different fund in the same family, without incurring any fees. This way you can rebalance your portfolio and it won't cost you a cent! Sometimes, all you have to do is stick with your investment horizon objectives and you will pay nothing.
03Avoid too many transactions
As is sometimes the case with your financial institution, services charges are levied when money is withdrawn from your funds. If these withdrawals are too frequent, the numbers add up and start eating into your savings.
Take a planned approach to your withdrawals so as to minimize the total number of transactions. Withdrawing larger amounts less frequently is a simple strategy to reduce these costs.
If this is not possible, make sure to choose a fund that meets your retirement needs and that features lower fees or no fee at all. There'll be more money for you at each payment!
04Reduce your management fees
All funds have a management expense ratio (MER) which varies between 1 and 3% of your portfolio, depending on the type of fund and its annual recurring costs. When your portfolio reaches maturity when you retire, these fees can be substantial and they won't exactly be contributing to higher returns.
The FlexiFonds MER is 1.5%. Moreover, FlexiFonds mutual fund advisors are not paid on commission, which means they can provide neutral and objective advice.Patrice Bégin, Director, FlexiFonds Advisory Centre
A reduction of only 0.5% can mean thousands of dollars in savings, depending on the invested amounts.
05When it comes to withdrawals, be strategic
Fund related fees can cut into your assets in a substantial way, but now that you are aware of the fact, you are in a position to reduce those costs significantly. Every investment portfolio is different and, by identifying the particular fees you are paying, you'll be ready to look at your best options for your quality of life and your peace of mind. The ball's in your court!
The FlexiFonds offering: retirement savings solutions
Are you looking to maximize or consolidate your retirement savings? The Fonds de solidarité FTQ has launched the FlexiFonds offering to meet your needs and support you throughout your retirement. Better yet, with these new products, you can continue to support Québec's economy! The FlexiFonds offering is the logical extension of your Fonds experience.LEARN MORE ABOUT THE FLEXIFONDS OFFERING
About FlexiFonds de solidarité FTQ
FlexiFonds de solidarité FTQ Inc. is a wholly-owned subsidiary of the Fonds de solidarité FTQ. FlexiFonds de solidarité FTQ Inc. acts as the principal distributor of the funds' units and is a mutual fund dealer registered with the Autorité des marchés financiers.
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About FlexiFonds de solidarité FTQ
FlexiFonds de solidarité FTQ inc., a wholly owned subsidiary of the Fonds de solidarité FTQ, is a mutual fund dealer duly registered with the Autorité des marchés financiers. FlexiFonds de solidarité inc. acts as the principal distributor of the FlexiFonds funds and does not distribute the units of any other mutual fund.