The Fee Reality Check — Mrs. Dow Jones
The Fee Reality Check

1% sounds like nothing. It isn’t nothing.

Investment fees are quoted in a unit designed to seem small. Here’s the same number in dollars, which is the unit you actually live in.

The balance your advisor or fund manages.
$
Look for “advisory fee,” “AUM fee,” or “expense ratio” on your statement. Tap one or type your own.
%
Years until you’d actually spend this money.
20 years
One step

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That fee will cost you
$0

What you’d have with no fee$0
What you actually keep$0
The gap$0
Fees paid
$0
Money that left your account.
Growth lost
$0
What those fees would have earned.

Why the second number is bigger than you’d think

Every dollar taken in fees is also a dollar that never compounds. Over decades that shadow cost usually outgrows the fees themselves, which is why “it’s only 1%” is such an expensive sentence.

Before you fire anybody

A fee isn’t automatically a rip-off. It’s a price.

Plenty of people should pay for advice. The question is whether you’re getting something worth this number. Ask your advisor, in writing:

  • Are you a fiduciary, always, in writing?
  • What is my all-in cost, including the funds you put me in?
  • Are you paid anything else for what you sell me?
  • What have my returns been after all fees?

If any answer is vague, that’s the answer.

Estimates only, not financial advice. Assumes a 7% annual return before fees.