The Untold Story Of Investment Fees And Expenses

Investors often worry about averting losses in the market. But they forget to consider another more clandestine way they are paying: investment fees and expenses.  

Mutual funds, exchange-traded funds (ETFs), and other investments typically carry yearly service and management fees that, over the course of a 10-year period, can add up to thousands of dollars. There are management fees, service fees, advisory fees, even 12b-1 distribution fees (essentially marketing costs) – all buried so deep in a fund’s reports that the typical investor has no way to decipher how much they’re being charged.

The Digital Flashlight:

With Personal Capital’s Investment Checkup, investors can shine a light onto what exactly they’re paying on each mutual fund or ETF. The total fees are automatically calculated and shown in both percentage terms and in absolute dollar costs.

Here’s how you can use this digital fix.

First, log into Personal Capital and select the “Investing” tab at the top, then “Investment Checkup” from the drop-down menu. From there, click the “Costs” tab, and voilà! First, you can see which accounts you’re paying fees for, and what those fees are.

As you scroll down the page, you can see what your overall portfolio fees are – and what that costs you in retirement. It’s a great way to find out if you’re paying much more than expected, or whether these funds will be worth their while in the future.

Continuing down the page, you can see more detail on specific holdings. You can see: tax cost ratio, turnover ratio, expense ratio – a number that wraps all those fees up and compares it to the total assets in the fund. This part of the tool actually calculates for you the dollar value of what each of your investments costs.

In sum, with Personal Capital’s Investment Checkup tool, you can not only see the current fees but what their true cost to you is over the years.