How Investment Fees Destroy Retirement Plans

Investment fees are one of the two biggest detriments to successful investing. I discuss this in detail when it comes to using Monte Carlo analysis to determine one’s ability to retire in my podcast here.

In this video though I show you how a portfolio with an all-in fee of .18% has a 95.7% retirement success. Whereas the exact same portfolio with a 1.50% fee has a 74.4% success.

Everything is the same. I use the calculator at www.firecalc.com if you want to run your own numbers.

The lower cost portfolio not only had a 28% higher success than more expensive one but its average account balance after 30 yrs was over $1 million.

The higher fee portfolio average account balance after 30 yrs was less than $500k.

So, if an advisor were running a monte carlo analysis based on this portfolio and NOT taking into consideration investment fees that advisor would provide a very misleading end-result.

Now, the one drawback of Firecalc.com is it does not take TAXES into consideration. So you’ll have to do your homework on that. Taxes are a big deal and should not be overlooked.

However, for what it’s worth FIrecalc.com offers the best financial planning calculator on the web when it comes to retirement projections.

You can change your scenario a bunch of different ways. Too many ways to get into here.

I can not recommend this tool enough.

As always if you have questions, thoughts or concerns, please let me know.

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