The power of compounding and 2% difference in investment returns

[redwing]

Using the ASIC Calculator $10k invested for 30 years with a $1000 a month top up

With 2% Fees and investment earnings of 7% each year you wind up with $841,836 the effect of fees is $403,740


With .06% fees and investment earnings of 5% (each year) you wind up with $848,876 the effect of fees is $9,719


At investment earnings of 7% in the second example to match the first one you wind up with $1,230,562 the effect of fees is $15,013

 

[knightm]

Using the ASIC Calculator $10k invested for 30 years with a $1000 a month top up

With 2% Fees and investment earnings of 7% each year you wind up with $841,836 the effect of fees is $403,740


With .06% fees and investment earnings of 5% (each year) you wind up with $848,876 the effect of fees is $9,719


At investment earnings of 7% in the second example to match the first one you wind up with $1,230,562 the effect of fees is $15,013

Such a good point redwing. Its so easy to discount (psychologically) the effect of fees for a slightly higher return.

This applies to property too. IE high maintenance costly repairs vs sensible no work required property (ignoring the value add reno component here) or alternatively the cost of strata fees with units.

Sometimes the least sexy properties make the best investments.

 

[redwing]

Thanks.

Just finished watching it. Yes, it does make a compelling case about investment costs eating away your investment returns big time over long period.

Cheers,
Oracle.

There's also this one (UK) Pension Plans - BBC Panorama P1- Who Took My Pension?

We all know our pensions are in crisis - we aren't paying enough into them and we're living too long. But could there be another reason? Penny Haslam reveals the fees and commissions that take vast amounts from our pension pots. In some cases, more than two-thirds of the amount of money we pay into our pensions over the years is taken out in fees. Rather than heading for retirement with a golden parachute, some of us will be left holding a lead balloon.