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Investment Fees Are Eating Into Your Wealth – BloombergQuint

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Pinching pennies pays if you are a mutual fund investor. A lot.

Sample this: Over 30 years, just 1 percent fee on mutual fund investments will leave an investor with 25 percent less corpus, according to Kunal Bajaj of online adviser Clearfunds. This money goes to the distributor or the adviser or the bank relationship manager, he said. “It’s your money and someone else’s kids are going abroad to study on it.”

Keeping expenses low is as important for a healthy portfolio as choosing the right investments. A zero-expense investment is a mirage, or a rarity, Bajaj and experts from brokerage and investment bank Ambit Capital said on BloomberQuint’s new show Portfolio. Investors, they said, must try the next best thing: keep them low. Particularly when investing in mutual funds.

Investor awareness is even more important now because Prime Minister Narendra Modi’s November 2016 cash ban has funnelled savings into stocks. Most of it is coming through domestic institutional investors like mutual funds, which on an average saw inflows worth Rs 22,500 crore every month in the last one year.

While the power of compounding works in favour of such investors ploughing money in mutual funds, compounding costs take a toll. One way to reduce that, according to the experts, is buying mutual funds directly.