Brian Korienek | Senior Associate Advisor | Goldstone Financial Group
A 1% fee doesn’t seem like much at first glance. After all, basic math tells us that it would only claim a single dollar out of a hundred or ten out of a thousand. To a new investor or aspiring retiree, signing over one or even two percent of a portfolio’s earnings might seem like a reasonable — or even small! — price to pay for enjoying the remaining 99% later in life.
A 1% cost might not look like much — but appearances can be deceiving. When it comes to investments, administrative expenses that may have seemed almost negligible at first can burgeon into costly financial demands. Mutual funds are particularly notorious for their plethora of so-called “hidden fees,” which often carve a significant portion of a portfolio’s future value away in a series of small cuts. Worse, these costs are often applied internally and may not be visible on your monthly statement; if you don’t go out of your way to investigate your accounts, you may never know precisely how much of your profits minor fees claim each year.
To continue our example — one dollar out of a hundred isn’t much of a loss. However, the primary financial drain to your account isn’t the initial deduction, but the opportunity cost posed by losing that dollar. By giving it up, you sacrifice its potential to compound and grow as an investment asset. For robust retirement accounts, these 1–2% fees could end up costing a retiree hundreds of thousands in lost profits. In 2018, analysts from Nerdwallet applied these average fees to a hypothetical millennial and found that over 40 years of saving, the investor would lose more than $500,000 to average charges.
Let’s break this down further.
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Investment Advisory Services offered through Goldstone Financial Group, LLC a Registered Investment Advisor (GFG). GFG is located at One Lincoln Centre, 18W140 Butterfield Rd., 14th Floor, Oakbrook Terrace, IL 60181, Telephone number — 630–620–9300.
