trajan wrote: ↑Fri Oct 28, 2022 4:26 am
That has to hurt. It has to.
You're confusing two different types of fees here.
What you call "bank/broker fees" are commission fees taken by the banks/brokers, who get a sales commission from the fund managers if you buy a fund through them. Remember, the banks/brokers are nothing more than an intermediary, they are not the actual fund managers. This gets broken down further into two different types: a. a "load", which is a fee that you pay at the time of purchase, say, 1% on the amount you invest. b. an exit fee, where they take, say, 0.3% at the time when you sell. These fees have ZERO value and must be avoided at all costs.
The other fees are what the fund manager themselves take. This is the MER (management expense ratio). This is what the 0.1023% you referred to above is referring to. This is how the managers of the fund gets paid. Index funds, because they make buying/selling decisions automatically/algorithimically (aka passive fund), have lower fees, like this 0.1%. Other funds, who have a human fund manager who solicits funds claiming to be able to beat the market with his special skills (aka active fund), charge more in MER because said fund manager and his staff are paid very high salaries. Many active funds charge MERs of 3% or more.
The goal in investing is to minimize fees. Selecting a passive index fund (like the eMaxis slim series) that have zero load, zero exit fees, and 0.1% MER, is by far your best decision. This 0.1% does not "hurt", it is the cost of putting your money to work. And it's very low, all things considered. And of course your principal (the amount you invest) is at-risk, that's the game.
The zero-cost alternative is to let your money sit in the bank, where you will be guaranteed 0.1% (or less) in interest, while losing 2% (or more) to inflation. Oof.