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Brokerages & Investment Fees

The mathematics of attrition — how seemingly small fees consume your lifetime wealth.

Nobel Laureate William Sharpe proved it mathematically: the average active investor must underperform the average passive investor after fees. This isn't opinion — it's arithmetic. Fee reduction is the only guaranteed way to improve your expected net returns.

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Our Fee Impact Calculator uses monthly compounding annuity formulas to visualize the exponential cost of fees over your investment horizon. Compare 5 fee presets or input your own.

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2025-2026 Fee Landscape

*Based on $100K initial + $500/mo contributions at 7% nominal return over 30 years

DIY Index Fund (Vanguard/Fidelity)

Lowest Cost
0.00 - 0.05%
Total Annual Cost
~$0 - $7K lost*
30-Year Impact

Robo-Advisor (Betterment/Wealthfront)

Low Cost
0.30 - 0.35%
Total Annual Cost
~$35K - $42K lost*
30-Year Impact

Active Mutual Fund Portfolio

Medium Cost
0.65 - 1.10%
Total Annual Cost
~$72K - $115K lost*
30-Year Impact

Financial Advisor (1% AUM + Funds)

High Cost
1.05 - 1.60%
Total Annual Cost
~$108K - $155K lost*
30-Year Impact

Hedge Fund / Private Equity

Highest Cost
2.50 - 3.00%+
Total Annual Cost
~$200K+ lost*
30-Year Impact

Fee Analysis & Investment Insights

Weekly breakdowns of investment costs, brokerage changes, and wealth-building strategies.

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Frequently Asked Questions

What is an expense ratio?
An expense ratio is the annual fee a fund charges as a percentage of assets under management. A 0.50% expense ratio on a $100,000 investment costs $500/year. Unlike brokerage commissions, expense ratios are deducted silently from the fund's net asset value — most investors never "see" this cost on their statements.
How can a 1% fee consume 30% of my gains?
Due to compound interest working in reverse. When fees reduce your balance each year, you lose both the fee amount AND all the future growth that money would have generated. Over 30 years, a 1% annual fee doesn't just cost 30% of your balance — it costs 30% of your total cumulative gains.
Are Fidelity Zero funds really free?
Yes, the expense ratio is 0.00%. However, these funds are proprietary and cannot be transferred in-kind to other brokerages. Moving from Fidelity requires liquidating the funds, potentially triggering taxable capital gains. A Vanguard ETF at 0.03% offers more portability for a negligible cost difference.
Is a financial advisor worth 1%?
It depends entirely on the value added. For complex situations (estate planning, tax optimization, behavioral coaching), a good advisor can earn their fee many times over. For simple index fund investing, the 1% fee is difficult to justify mathematically. The key question: "What am I getting beyond investment selection?"
What about "hidden" trading costs?
Active funds incur additional costs from bid-ask spreads and market impact when trading frequently. These internal transaction costs can add 0.50-1.00% in drag beyond the stated expense ratio. SEC Rule 605 reports help reveal execution quality, but these costs are rarely disclosed to retail investors.