That “small” 1% fee? It could cost you tens (or hundreds) of thousands. Check Below and Learn how two common investing myths quietly sabotage your financial future👇
The Hidden Cost of “Just 1%”
Two innocent-sounding beliefs could quietly drain your retirement savings:
- “1% fees aren’t a big deal.”
- “Expensive means better.”
💼 Example 1: Angela’s Investment Decision
Angela is a 35-year-old freelance designer saving $10,000 per year. She’s deciding between two funds:
- Fund A: 0.05% fee (low-cost index fund)
- Fund B: 1.05% fee (actively managed mutual fund)
Assuming both earn a 7% annual return before fees, here’s how her investment looks after 30 years:
| Fund | Annual Fee | Final Value (30 Years) | Lost to Fees |
|---|---|---|---|
| Fund A | 0.05% | $944,600 | — |
| Fund B | 1.05% | $760,400 | -$184,200 |
📉 That’s $184,000 lost — not from a bad investment, but from a 1% fee difference.
💰 Example 2: Marcus and His Advisor
Marcus is 40 with a $500,000 portfolio and pays a 1% AUM fee to his financial advisor. Here’s how much it costs him over 25 years:
| Scenario | Annual Return | Final Portfolio Value |
|---|---|---|
| Index Funds (No Advisor) | 7.5% | $2,710,000 |
| With 1% AUM Advisor | 6.5% | $2,130,000 |
| Difference | — | -$580,000 |
👀 Marcus pays nearly $600k in hidden costs — all from a 1% advisor fee.
🔍 Are All Advisors Bad?
No — but you should:
- ✅ Work with Fee-Only Fiduciaries
- ✅ Avoid percentage-based AUM fees if possible
- ✅ Use index funds for core investing
📌 Final Thoughts
- 1% may look small, but it compounds into six figures over time
- “You get what you pay for” doesn’t apply to investing
- Every % you save on fees = more money for you
