Fees are an important part of investing. But I think it is helpful to frame the conversation a little differently: you do not retire on low fees — you retire on what you keep.
That is an important distinction, because the goal is not simply to pay the lowest possible cost. The goal is to make good long-term decisions that help you maximise your wealth over time, after fees.
The cheapest option is not always the best outcome
Think about booking a flight.
At first glance, the cheapest ticket can seem like the smartest choice. But experienced travellers know that not all flights are equal. Some airlines invest more in their aircraft, crews, technology, and service. They are often better equipped to navigate delays, adjust to changing conditions, and get passengers where they need to go more smoothly.
Investing works in a similar way.
Lower cost can be a good thing. But cost alone does not tell you whether an investment is well built, well managed, diversified appropriately, or positioned to deliver better long-term results for you and your needs.
Why net returns matter more than headline fees
What matters most in the end is not just what an investment costs — it is what return you receive after fees and tax.
That is the number that shows up in real life. It is also the number that compounds over time. And that’s the number that a professional Financial Planner focuses on. Especially the taxation part. Which can be complex to understand if you are not a professional.
One of the examples in the attached material compares two hypothetical investments:
Investment A earns 7.0% before fees and charges a 0.10% fee, and loses about 1% to “tax drag”, leaving a 5.9% net return
Investment B also earns 7.0% before fees, but charges a 0.75% fee, and loses 0% to “tax drag”, leaving a 6.25% net return
At first glance, Investment A looks more attractive because it is cheaper.
But the chart in the attached piece shows that over 30 years, that modest 0.35% difference in annual net return grows into a meaningful gap: about $61,641 for the higher-returning investment versus about $55,831 for the lower-cost option — a difference of roughly $5,800.
The hidden cost many investors overlook
Fees are easy to see.
What is often harder to spot is the cost of underperformance.
A lower-fee investment that consistently delivers weaker returns can actually cost more over time than it saves. The bar chart in the attached material makes that point clearly: the savings from lower fees were about $5,810, but the loss from lower returns was about $18,688, leaving a net shortfall of $12,878 over 30 years.
That does not mean a higher fee is always justified.
It does mean that fees should be judged in the context of the value being delivered.
Better questions to ask
Rather than focusing only on “What does this investment cost?”, it can be more useful to ask:
What role does this investment play in my portfolio?
Does it improve diversification?
Does it increase expected long-term return?
Does it help me reach my goals with greater confidence?
Am I getting good value for the fee I am paying?
Is it tax-efficient in it’s returns? How are the investment returns taxed?
The bottom line
Fee comparisons are useful, but they are only one part of the equation.
The best investment choice is rarely determined by price alone. What matters most is whether the investment is helping you build and preserve wealth in a way that supports your long-term goals.
Because in the end, you do not retire on what you pay.
This material, intended for the exclusive use by the recipients who are allowable to receive this document under the applicable laws and regulations of the relevant jurisdictions, was produced by and the opinions expressed are those of Matthew Ramadan at Monarch Wealth as of the date of this publication, and are subject to change based on market and other conditions. The information and/or analysis contained in this material have been compiled or arrived at from sources believed to be reliable but Matthew Ramadan does not make any representation as to their accuracy, correctness, usefulness or completeness and does not accept liability for any loss arising from the use hereof or the information and/or analysis contained herein. The information in this document including statements concerning financial market trends, are based on current market conditions, which will fluctuate and may be superseded by subsequent market events or for other reasons.
All overviews and commentary are intended to be general in nature and for current interest. While helpful, these overviews are no substitute for professional tax, investment or legal advice. Clients should seek professional advice for their particular situation. Past performance does not guarantee future results.
Stocks, bonds and mutual funds are offered through Monarch Wealth Corporation. Insurance products and services are offered through Matthew Ramadan at Monarch Wealth.
Monarch Wealth Corporation is a member of the Canadian Investor Protection Fund
STATEMENT OF CONFIDENTIALITY The information contained in this email message and any attachments may be confidential and legally privileged and is intended for the use of the addressee(s) only. If you are not an intended recipient, please: (1) notify me immediately by replying to this message; (2) do not use, disseminate, distribute or reproduce any part of the message or any attachment; and (3) destroy all copies of this message and any attachments.
