MONEY · INVESTMENT FEES
0.47 of a point in fees: what it really costs over thirty years
Fees of 0.67% instead of 0.20% cannot be felt. Over thirty years, at $300 a month and 6% gross, the gap reaches $24,600 — 23% of everything you will have paid in.
By the Yoseri News desk · · 5 min read
You have never left a fund because of its fees. Nobody does, and that is exactly the problem: fees never hurt you in the moment. They take nothing you can see, send you no invoice, and simply subtract a fraction of a point from you each year.
What $240 really represents
Take an ordinary portfolio — yours, with your figures, if you like: $35,840 spread across a few funds. Fees paid over twelve months: $240, or 0.67% of assets. Put that way, it sounds harmless.
Put another way, less so: those $240 are 6% of the year’s return. A gross return of 12.6% becomes 11.9% net. You took all the risk; you keep 94% of it.
The fund that weighs four times its size
Your fees are almost never spread evenly. In this portfolio, a property fund is 9.2% of the investments but 27% of the fees. Its management ratio of 1.97% is twenty-two times that of the cheapest ETF held beside it, at 0.09%.
| Source | Base | Rate | Paid |
|---|---|---|---|
| Property fund | $3,300 | 1.97% | $65 |
| Crypto purchases | $7,218 | 0.94% | $68 |
| All-in-one ETF | $7,560 | 0.20% | $15 |
| Index ETF | $9,240 | 0.09% | $8 |
Look at the last column: the small fund costs eight times more than the large one. That is the definition of a line worth examining.
The thirty-year calculation
An assumption, written down so you can redo it: $300 a month for thirty years, a gross return of 6% a year compounded monthly, and fees as the only difference.
- Paid out of your own pocket: $108,000
- With 0.67% in fees: $265,500
- With 0.20% in fees: $290,100
- Gap: $24,600 — 23% of everything you will have paid in
It is not a forecast. Change the return and both columns move together; the gap between them moves far less — which is what makes fees so peculiar.
Twenty-four thousand six hundred dollars for 0.47 of a percentage point. No stock-picking decision, no market timing, no extra risk taken would have produced that amount with anything like the same certainty.
What fees do not tell you
A low management ratio does not guarantee you a good investment, and two funds tracking the same index can differ in tracking error and tax treatment. Currency hedging, for instance, costs about 0.15 of a point a year in tracking error: it protects you from a move in the dollar, but it is not free.
Put another way: your fees are the only certain element of the equation. Your return never is.
And for you, what does that mean?
Add up what you pay in dollars over twelve months — management fees, platform fees, bid-ask spread, currency conversion fees. Divide by your return for the year. If the result is above 5%, the most expensive line deserves a question.
Yoseri’s Investments page does that addition automatically, source by source, and compares funds tracking the same index. It recommends no product, and Yoseri is registered in no capacity with any market authority — in Quebec, the Autorité des marchés financiers.
Where the figures come from
The maths in this article starts from the assumptions written above. Run them again with your own figures — you should land on the same numbers.
Yoseri News is an educational publication. Nothing in this article is investment advice, a recommendation to buy or sell, or tax advice. Yoseri is registered as neither an adviser nor a dealer with any market authority.