The Money Guide: Retirement (part 2)
Why do costs matter in retirement savings?
We help you understand the costs you are paying
Every investment, including your retirement savings, has costs. Costs take away from your returns, creating a gap between the returns that investment markets deliver and what you earn on your investments. Some costs are well disclosed and some not. Costs that are disclosed may seem like small amounts – a low percentage such as 2% or 3%. But you should remember you don’t lose just the amount that the costs add up to, but also the growth on the amount you would have had for years into the future. If you’re investing for a long time, as you do when investing for retirement, the effect of the costs compounds or multiplies over time, adding up to a significant amount. According to 10X Investments, this probably understates the long-term fee impact because the National Treasury’s numbers are based on the real (after-inflation) return that investors can expect from their multi-asset or balanced portfolio with up to 75% in equities. Understand the costs you are paying The costs you may pa...
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