You’ll have to be attentive because often you have only 90 days after the warranty expires to claim and spend your refund. You don’t get cash, but you will get a credit, excluding taxes. Some retailers, like Sears, let you use the credit only on a new purchase that is twice the value of the credit, so you’ll need to spend $200 to use a $100 credit. Other restrictions may apply on which type of products you’re allowed to buy. In most cases, you’re still better off turning down the sales pitch for the extended warranty, a service that is hugely profitable for retailers.

For the third time in a row, a Global Fund Investor Experience (GFIE) report from Morningstar Inc. in Chicago has ranked Canada as the lowest-scoring country in this category. Meanwhile, our friends to the south earned top marks: the United States got a stellar ‘A’ rating versus Canada’s bottom-scraping ‘F.’ What’s more, the remaining 22 European, Asian, African and Commonwealth countries in the comparison were at least capable of a passing score, if not much better. The full report is provided here.

The notable fact that two neighbouring countries are at the top and bottom of the spectrum for average fees paid was not lost on Morningstar. “The United States… is marked by a large number of self-directed investors, economies of scale, a high level of price competition, a retirement tax preference that uses the same investments for tax-preferred investments, and one of the highest percentages of assets paying an outside advisory fee not reflected in a fund’s total expense ratio,” the GFIE report said. “Canada is on the opposite end for all those factors, plus Canada levies a consumption tax on fund management services.”

For savvy investors, news of Canada’s contemptible mutual fund costs is hardly a bombshell revelation. But this latest GFIE report at the very least adds another considerable voice of dissent to the growing number of media pundits and advocacy groups now demanding an overhaul of Canada’s mutual fund industry. As it stands, the high cost of buying funds here can be attributed to many unsavoury practices, including self-interested salespeople, opaque contracts and hidden fees. The well-known fact that the vast majority of Canada’s actively managed mutual funds are in fact closet index-huggers makes paying these kind of inflated prices even more outrageous.

As the Morningstar reports lays out, Canada isn’t following the lead of the growing number of countries moving away from load fees. For instance, in half the countries in the GFIE study, front-end loads either don’t exist (albeit rarely) or are commonly negotiated away by retail investors. As for deferred sales charges, Morningstar states that these have fallen steeply out of favour in the top-ranking U.S., “with many fund companies shutting down the share classes that charged deferred loads.”

So what’s happening in Canada? Nothing to brag about. Canada stood alone with Japan as having the highest fixed-income fees, and only Canada and Italy were among countries with average fees for equity funds surging beyond 2% (in the U.S., these expenses are below 1%). Canada also took the dubious honour of having the only average allocation fund fees over 2%.

Reading all of this is enough to make anyone want to swear off mutual funds in Canada. However, it’s critical for investors—particularly those looking for an uncomplicated long-term investment strategy and those with limited resources—to know that the actual structure of mutual funds is sound when used properly. For instance, Canadian fund providers such as Mawer, Steadyhand, and Phillips, Hager & North are providing excellent value to investors—providing lineups of low-cost, no-load active funds that are concentrated, unconstrained and non-benchmark oriented.

Be sure to watch out for my feature, “The Smart Investor’s Guide To Mutual Funds,” in the forthcoming summer issue of MoneySense. The article will provide a comprehensive overview for using mutual funds correctly, and for avoiding their many pitfalls. As it stands, Canadian mutual fund investors deserve a lot better than they’re getting.

By the end of last year real estate prices had climbed about 85% over the previous decade, according to the Teranet/National Composite Bank House Price Index.

Stocks? The TSX/Composite Index has had a total return of about 141% during that period or about 9% annually. Go back 20 years and stocks still return more than 9% annually over the period.

One can sympathize with Mr. Marr’s intention to provide a counterpoint to the constant rah-rahs from the real estate industry (As a matter of fact, many years back, I wrote a very similar post in response to industry claims that real estate beat stocks here). However, Mr. Marr is incorrect in comparing home prices with stocks. Here’s why:

The total return from stocks includes the change in price level of the TSX index from 6,614 in 2003 to 12,433 in 2012. That’s a gain of 88 percent. The rest of the gains came from reinvested dividends (The TSX Composite yields about 3 percent per year). The return from housing was measured solely as the increase in the level of the Teranet – National Bank National Composite House Price Index and does not account for rental income from a property. It is true that owning a home entails expenses such as property taxes and maintenance but even in frothy markets like the present one, housing typically will have a positive yield net of expenses but excluding the cost of financing. Therefore the column presents an incorrect picture by comparing total returns from stocks with just the increase in price level of real estate.

Even if it turns out that stocks beat out real estate over the past decade, it still does not mean anything unless one takes risk into account. After all, if stocks beat bonds in most time periods, investors would hardly express surprise because stocks are riskier than bonds. The TSX Composite annualized returns had a standard deviation (a measure of riskiness of stocks) of 19.53% in the 2003 to 2012 period. The Teranet / National Bank National Housing Price Index, on the other hand, showed a standard deviation of just 2.6% during the same time period (assuming I did the calculations correctly with the information available from housepriceindex.ca). If real estate is less risky than stocks, one would expect real estate to have lower returns as well.

Related Reading:

• Real Estate Returns
• Real Estate Returns
• Money Tip: Buy a home you can afford
• Asset Class Returns for 2010
• So, What Should I Do About the Housing Bubble?

Reasons for Caution in Comparing Real Estate Returns with Stocks is brought to you by Canadian Capitalist — Helping you to invest & prosper.

—Roy Wright, Burns Lake, B.C.

A: Your story is a cautionary tale for those who are considering using the RRSP over-contribution room as a strategy, instead of as a cushion. Sure, the rule allows you to take advantage of a little bit of tax-free growth. But it was designed simply to protect you in case you inadvertently contributed a little too much. Darryl Robinson, a fee-only planner at D. Robinson & Associates in Winnipeg, says, “Using up the limit leaves no room for error, resulting in penalties.” And the penalty is hefty: 1% per month on any amount that exceeds the $2,000 over-contribution limit. You corrected your mistake quickly by removing the funds, so it’s not clear why that message is still on your wife’s file. I would call the Canada Revenue Agency to find out—but more importantly to be 100% sure you are not being charged a penalty.

Bruce Sellery is a frequent guest on financial television shows and author of Moolala. Do you have your own personal question? Write to Bruce at ask@moneysense.ca.