Have you ever looked at your workplace pension or RRSP and felt like you were staring at a bowl of alphabet soup? Between “Active Portfolios,” “Target Date Funds,” and “Index Funds,” it’s easy to just click “Default” and hope for the best.
That is exactly where I was. I had my balance spread across nearly 20 different funds. It looked diversified, but in reality, it was just expensive. Here is how I audited my portfolio, cut the “management bloat,” and set myself up to save thousands of dollars over the next decade.
The Problem: The “Management Bloat”
Many employer plans offer ‘Active Portfolios’. These sound great because they imply professional managers are “actively” trying to beat the market. However, as I discovered with my ‘Active Canadian Equity Portfolio’, “active” often just means “more expensive.”
For example:
Performance: My Active Canadian fund returned 16.93% over the last 3 years.
The Benchmark: Meanwhile, the Canadian market (S&P/TSX Composite) returned 18.89%.
The Verdict: I was paying higher fees for a fund that was actually underperforming the market by nearly 2%. Now multiply that by a decade or more and you see how this compounds against me.
The Solution: The “Core and Satellite” Strategy
Instead of letting a manager pick stocks (and charge me for it), I decided to take control using ‘Passive Index Funds’. These funds, like the ‘TDAM Canadian Equity Index‘, simply track the market for a fraction of the cost.
We rebuilt my portfolio using an ‘8-fund strategy’:
1. The Core (77%): Four low-fee index funds covering the US, Canada, International, and Global markets.
2. The Satellite (21%): A small amount kept in “Target Date” funds (Granite 2040/2045) to provide automatic stability as I get closer to retirement.
3. The Safety (2%): A tiny sliver in a Money Market fund for immediate liquidity.
The “Math” of Success
By switching from high-fee active funds to low-fee index funds, I reduced my average management fee from roughly 0.85% down to 0.28%.
On my current balance plus my bi-weekly contributions, the savings add up fast:
Yearly Savings: ~$222.00
10-Year Impact: ~$3,200 (including growth)
Retirement Impact: Over $5,500 extra in my pocket, not the fund manager’s, all for less than an hour worth of work!
The Lesson
Don’t be afraid to look under the hood. If your funds are consistently underperforming their “Benchmark,” you might be paying for “active” management that isn’t working for you. Switching to a balanced, index-heavy portfolio isn’t just about being “organized”—it’s about giving yourself a permanent annual raise. And if you are not very familiar with all these portfolios or which ones to use for your situation, you can do your research online or using one of the various AI tools out there. The money is there to be saved and to work in your favour in the future. You jut have to do some work now, to be paid in huge dividends in the future.