T-Rex Scores are the best predictor of a fund’s relative performance!

T-Rex Scores aren’t the only factor to consider when choosing investments. But if you are a long term investor,  your T-Rex Score will have a significant influence on your ability to achieve financial freedom.

What’s The Fee? (WTF?)

Continued media commentary, regulatory initiatives and promotional efforts by newer, lower fee investment providers are slowly leading to improved Canadian investor awareness of investment fees. But, according to a July 2016 survey of Canadian investors carried out on behalf of Tangerine Bank, “36 per cent of those surveyed claimed they don’t pay any fees, and another 11 per cent were unsure if they pay fees”. Of the 53% who knew they were paying annual fees, how many know the full amount?  Not many. And among those investors that know the full amount they are paying, how many understand the true impact of those fees on their returns over time? Very few.

“Unthinking respect for authority is the greatest enemy of the truth.” Albert Einstein

WTF? Reprise

With great difficulty, after many years of obfuscation (translation: stonewalling, wailing and gnashing of teeth) from the financial industry, regulators are just now forcing partial investment fee disclosure in annual investor statements. Incredibly, fees retained by third party fund managers need not be disclosed. So, while millions of investors may discover for the first time that they are paying fees, they may believe they are paying much less than they truly are.

Every investor has a T-Rex Score. And every investor should know their Score. If your investments include mutual funds, ETFs or index funds do a search with the fund name and the words “fund facts” and you should be able to find your Fund Facts document (for example, google RBC Select Conservative Portfolio fund facts). Look for the MER (Management Expense Ratio) which represents the annual fees you pay. Note that your broker or advisor may charge additional fees.

Regardless of the nature of your investments, and even if you are confident you know the full extent of fees you are paying, send your provider the following request:

“I need to get a complete and clear picture of investment fees I am incurring. Please provide (in writing) a full summary of all investment related fees I am either paying to, or are being deducted by, you, your firm, any underlying fund manager and any other party involved. Please provide fee details both in terms of current dollars and percentage of my total investments. “

“Thank you.”

Don’t be satisfied until you receive and fully understand this summary.

(Note there are many “packaged” investments such as whole/universal life insurance,”seg” funds, structured GICs, principal protected notes, “guaranteed cash flow” products, etc. which incorporate substantial buried fees. It is very difficult to determine T-Rex Scores of these products. This is a subject for another day.)

T-Rex Calculator

Under any scenario you wish to explore, the T-Rex Calculator reveals how much of your investment return you actually get to keep. Play around with scenarios. Get a feel for the magic of compounding and the impact of fees. Once you have settled on a scenario that is right for you, input the numbers. Now you know your T-Rex Score!

(Feel free to direct your advisor to www.larrybates.ca – get their observations on your T-Rex Score!)

Fair Share?

Now you can make a “value” judgement. Are you are receiving your fair share of investment returns?

What Are You Prepared to Do?

If you aren’t satisfied, what are you going to do about it? Would increasing your T-Rex Score and keeping more of your investment returns be worth spending the short amount of time necessary to learn investment basics. Because  basic investment knowledge is all you need to make better choices, achieve higher T-Rex Scores and enjoy increased financial freedom.

It’s easy when you know how.