🤔 basis points cost you

how much does the difference in fund management fees (MER) cost you in the long run?
ex.
- MER 0.50 %
  - "Mutual Fund"
  - ex TD US Index Mutual Fund - I Series
  - ex. WealthSimple managed
- MER 0.03 %
  - "ETF"
  - ex. iShares S&P ETF
- Invest $ 100,000 for 30 years
- assume both have identical 7% underlying index performance
- math
  - Mutual Fund
    - 100,000 * (1.07 - 0.005) ^ 30 = $ 661 436
  - ETF
    - 100,000 * (1.07 - 0.0003) ^ 30 = $ 754 848
  - Difference
    - $ 93 412 less (in future dollars)
    - $ 12 375 less (in current dollars)
    - 12.375% less
    - What equivalent ETF investment?
      - $ 754 848 = X * (1.07 - 0.0003) ^ 30
      - X = 754 848 / ( (1.07 - 0.0003) ^ 30 )
      - $ 87 625
      - ie. $ 12 375 less

2023-02-28

2023-01-23	🤔 expenses	#personal-finance #modeling
2023-06-09	🤔 appreciating value	#value-creation #ethics #economics
2023-02-01	🤔 inflation	#personal-finance #economics
2025-01-21	🤔 value, markets, ai	#economics #artificial-intelligence #market-design
2023-01-31	🤔 real estate tax	#public-policy #taxes #land-value-tax

Related Words