investing in a fund

Ask hard questions of your advisor. Don't be shy, it is your money!!

What are the tax implications of investing in this fund?

If you are buying the fund for a non-registered portfolio, ask about its tax history.

If it is an equity fund, does it have a record of paying high annual distributions, which will be taxed in the year received.

If it is an income fund, what percentage of the distributions is tax-deferred or tax-advantaged.

If I invest in this fund, how will it change the asset mix in my portfolio.

Will the revised asset mix be consistent with my overall objectives.

You need to know whether the addition of one or more new funds will create a significant change in your portfolio balance.

Ask for a break-down of your current asset mix and for a projection of what it will look like if the recommendation is implemented.

If there is a change, ask the advisor to explain why he believes this is to your advantage and whether it will add more risk.

Gordon Pape, Contributing Editor of 50Plus.com, is one of Canada's best known and most respected financial authors and commentators.