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Disclaimer: I am going to mention the investment company that I am using, but I am not related in any way with this company, is just to exemplify my question.

I am currently using foliofn.com. They charge $290 per year, for unlimited window trading. You can trade ETF, Mutual Funds, Stocks and others. I am trying to find what is my effect percentage fee for my investment. If I pay 290 per year, and I have 10K in investments (example), the normal calculation will be

290/10,000 = 0.029 = 2.9%

Now, the problem is that I have heard that mutual funds have their own fees, so if I have a mutual fund on my portfolio, then how I will make this calculation?

I guess there are two questions in this essay:

(1) Is my assumption of $290/10K = 2.9% correct?
(2) How do I calculate additional fees within my portfolio to know my effective fee rate?

Thanks.

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The fees that the funds charge would be explained in their respective prospectuses.

With the other question, you're correct.

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You calculated correctly the part of your expenses owing to the flat annual fee charged by your financial institution, 2.9%.

If you invest in a mutual fund having an expense ratio of 0.75% (for example), then you have to add that percentage to the base 2.9% to get the total expense ratio.

I have to point out that 3% or more is an absurdly high expense ratio.

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  • Thanks for the pointer. I have been working hard to reduce my expense ratio, but I always find a "good" reason to spend my money somewhere else :(. I will work on 2011, on reducing that expense ratio.
    – Geo
    Commented Jan 3, 2011 at 3:34

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