Why a 0.5% fee costs you about 13% of your wealth over 30 years

Fund fees are charged as a percentage of your balance, every single year. That lowers more than one year’s return: it shrinks the base on which every following year compounds.¹ The U.S. Securities and Exchange Commission shows the same effect with its own numbers: $100,000 earning 4% a year grows to about $208,000 in 20 years with a 0.25% fee, but only to about $179,000 with a 1% fee.²

What half a percent costs

• No fees
• With a 0.5% fee

Simplified: annual compounding, fee deducted from the return, no taxes.

Show as table

Year	No fees	With a 0.5% fee
0	10,000	10,000
5	12,763	12,462
10	16,289	15,530
15	20,789	19,353
20	26,533	24,117
25	33,864	30,054
30	43,219	37,453

After 10 years the gap is only $759. After 30 years it is $5,766, or 13.3% of the fee-free balance.¹ The gap grows faster than the balance itself, because every dollar taken out earns nothing in all the years that follow.

Fee calculator

Currency

CHFEURUSD

Lump sum todayCHF

Monthly savingsCHF

Investment period

30 years

Return before costs per year%

Option A: costs per year%

Option B: costs per year%

Total expense ratio (TER) plus custody fee.

DifferenceCHF 4,54810.8% of the higher final value

With 0.50% costsCHF 37,453

With 0.10% costsCHF 42,001

Paid in: CHF 10,000

After	A	B	Difference
5 yrs	CHF 12,462	CHF 12,702	CHF 240
10 yrs	CHF 15,530	CHF 16,134	CHF 605
20 yrs	CHF 24,117	CHF 26,032	CHF 1,915
30 yrs	CHF 37,453	CHF 42,001	CHF 4,548

Simplified: the same return every year, costs deducted directly from the return, savings at the end of each month. Before taxes and inflation.

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Why cheap funds usually do better

Fees are certain; returns are not. Morningstar looked at which funds beat their category over time. Among U.S. stock funds in the cheapest fifth, 62% succeeded, against 20% in the most expensive fifth.⁴

Economist William Sharpe calculates that, under plausible assumptions, a saver who chooses low-cost investments can enjoy a standard of living in retirement more than 20% higher than someone in high-cost products.³

Where to find the costs

The key number is the expense ratio, usually shown on the fact sheet as TER or “ongoing charges.” It covers the fund’s running costs. What your bank or platform charges for custody and trading comes on top. For a fair comparison, add up:

• each fund’s expense ratio,
• your platform’s custody fee,
• any sales or redemption charges, spread over how long you plan to hold.