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Scenario A final
140.464 €
Scenario B final
116.842 €
Difference in final capital: 23.622 €
See how a small difference in management costs (TER) can mean tens of thousands of euros over 20 years, through negative compounding.
John Bogle, founder of Vanguard, used to say: "In investing, you get what you don't pay for." Fees are the one factor you control completely, and the one that guarantees a higher net return.
Many investors dismiss a 1% or 2% difference in a fund's TER (Total Expense Ratio) as irrelevant. But as this simulator shows, over the long run that small percentage, compounded, can mean losing a third or more of your potential returns.
"Properly measured, the average actively managed dollar must underperform the average passively managed dollar, net of costs."
— William F. Sharpe (Nobel Prize in Economics)
Every euro you pay in fees is not just a euro lost today; it is a euro that stops compounding for you over the next 20 or 30 years. That is the real cost of funds with excessive fees.
Before taking out a financial product, always check the TER and compare it against low-cost index alternatives.