A 1% Fee Costs You 25% of Your Wealth Over 30 Years
Growth of $100,000 at different expense ratios
A $100,000 portfolio earning 8% gross with a 0.03% expense ratio grows to approximately $986K over 30 years. The same portfolio with a 1.5% expense ratio grows to only $587K. That 1.47% annual difference compounds to $400K of lost wealth.
What history says
Editorial commentary written by ALAN analysts. Figures cited below are analyst-authored context — they are not derived from the chart above and may reflect different windows or sources.
The relationship is roughly linear: each 0.5% in fees costs approximately 12% of terminal wealth over 30 years. This is the most powerful argument for low-cost investing.
Market returns are uncertain. Fees are not. A 1% fee is a certain, recurring, compounding headwind regardless of market conditions.
For a 35-year-old with $100K today, the fee difference equals approximately $400K at retirement. That is 5+ years of living expenses lost to fees.
Run a fee audit once a year: list every expense ratio, advisory fee, and fund layer you pay, and make anything above rock-bottom cost justify itself — the arithmetic here shows small annual differences compounding into retirement-sized sums over 30 years.