Common Investing Mistakes Canadians Make
Understanding where long-term investors typically lose performance
Most investing mistakes in Canada are not caused by poor stock selection. They come from structure, fees, and how portfolios are built over time. Even small inefficiencies can have a large impact over a 20 to 30 year horizon.
1. High Fee Mutual Funds (MER Drag)
Many Canadians still hold bank-issued mutual funds with management expense ratios (MERs) between 1.5% and 2.5%. While this may seem small, it compounds significantly over time and reduces long-term portfolio growth.
In contrast, low-cost index ETFs typically charge under 0.25%, allowing more of your returns to stay invested and compound.
2. Overexposure to the Canadian Market
A common pattern in Canadian portfolios is heavy concentration in domestic equities. This is often unintentional, especially through bank funds and employer plans.
The Canadian market is relatively concentrated in financials, energy, and materials, which means limited diversification across global sectors like technology, healthcare, and international growth markets.
3. Lack of Global Diversification
Many investors remain overly focused on what they know locally. However, global diversification helps reduce risk and smooth returns across different economic cycles.
4. Emotional Investing Decisions
Buying and selling based on short-term market movement is one of the most common long-term performance reducers. Consistency and time in the market generally matter more than timing the market.