Wall Street Eats A Third Of Your Savings – Business Insider
In my post from a few weeks ago, I explained how Wall Street wants your balls – that is, if you compare retirement savings to balls, as I did in the second video in that post.
Investment advisors and mutual funds take money (or balls) out of your account, somewhere around an average of 1.5% a year.
But that’s not the only cost to you, because you now have a smaller account, and you’ve missed out on the growth of the money that could have been in your account if it didn’t go to a financial-services entity.
To illustrate this, let’s assume you have $100,000 and you invest that money in the stock market via a mutual fund that charges 1.5% a year. Let’s also assume that the stock market returns 8% a year for the next 20 years, but paying 1.5% knocks your return down to approximately 6.5%. (Yes, paying some mutual funds and investment advisors leads to market-beating returns, which I’ll get to later.) Here’s what the next two decades could look like: