Fee only financial planner Minneapolis, Fee only financial planner Saint Paul

Wealth Building Topic #1 = Fees

The most popular retirement investment products in the US are mutual funds, variable annuities, variable life insurance, exchange traded funds, and index funds. You might have heard pros and cons for each, but one thing that is less often talked about is the fee structure of each product. Total annual fees can range between 0.1% to 3.0% of the invested amount.


Did you know that a 1% difference in the fee can cause almost 32% difference in your balance at the end of 30 years of investing? A 32% difference is HUGE! Forget about trying to predict and dodge a major recession. This 1% fee difference by itself is a major loss in your investment.  Ask Warren Buffett for the single most powerful factor behind his  investing success, and he’d respond “compound interest” — without  skipping a beat. (click here to view the source) or (https://www.marketwatch.com/story/this-warren-buffett-rule-can-work-wonders-on-your-portfolio-2016-04-26)  Lower fees help your investment portfolio harness the power of compounding. Check out the illustration below to see a visual of what this looks like.


The next newsletter will be issued in about 2 months. In it I will talk about how to find the fee information for your investment products whether they are IRAs, 401K, or annuity accounts. You might be surprised to realize how some companies try to avoid revealing the total fees for each of their products.


An attached downloadable document below is an Excel workbook to demonstrate the power of compounding.  

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Investor Learning Track 1 (xlsx)

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