Ignoring fees
The mistake
A yearly fee of 2–3% sounds tiny, but over time it can eat a third or more of your gains. In Latin America, the currency spread on changing money is a hidden tax many people never notice on top of that.
How to recognise it in yourself
- You cannot state the annual percentage your fund or pension administrator charges.
- You compared two products by past returns without checking whether both figures were net of fees.
- You chose a "no commission" service without asking how it makes money instead.
What it costs if you leave it
Fees are the one variable you can control with certainty, and they compound in the wrong direction. On 100,000 invested for 20 years at an assumed 7% gross return, a 0.3% annual fee leaves roughly 366,000 while a 1.5% fee leaves roughly 292,000 — about a fifth of the final balance, gone to a difference that never appeared as a charge on any statement. Nobody can promise you an extra percentage point of return; anybody can stop paying one.
The fix
Before you buy anything, write down the total annual cost — fund fee, broker commission, and currency spread if relevant — and compare it against the cheapest reasonable alternative. Make this comparison a habit, not a one-time check.
A concrete example
Over several decades, a fund charging 2% a year versus a similar one charging 0.3% can differ by roughly a third of the total final return — purely from cost, with identical underlying performance. Fees are one of the few things in investing you can control completely.