How high fees can compromise your dream retirement.

Most retirement products cost around 3% in fees. 10X never charges more than 1% excluding VAT. A 2% difference might not sound like a big deal, but compounded over your working career, it could be the difference between exploring the wonders of the world and wondering where your savings have gone. That may sound like an exaggeration, but the maths doesn’t lie. You could retire with 60% more money just by paying 2% less in fees.

So if your retirement plans involve exploring The Great pyramid of Giza or frolicking in France, read on to understand exactly how investment fees impact your savings.

The standing start

Let’s use a simple example and assume that you invest R10,000. You don’t add to it, or withdraw any money for 30 years.

Let’s also assume that your money grows at 6% above inflation every year for the 30 years. So after a year, your R10,000 is worth R10,600.

Now let’s see what happens to your money when you pay 3% in fees, compared with 1%.

R10,600 – 3% fees (R318) = R10,282


R10,600 – 1% fees (R106) = R10,494.

Sounds okay, right? At 3%, you’re about R200 worse off. Even the next four years don’t look so different:

After five years, the more expensive investment is still only around R1,200 worse off. But it’s taken five years to get to where the lower cost one got in three.

The acceleration

Now, look what happens if we check in every five years rather than every year.

After year 20, the more expensive investment is worth almost R9,000 less than the low cost one. It’s also eight years behind – the low-cost fee got to R17,000 in year 12.

Over time, the gap keeps widening ... and things start to get really fast. Try not to blink.

After 30 years of paying 3%, your R10,000 investment has grown to R23,031. At the lower cost of 1%, it’s worth R42 484. 

Paying 2% more has cost you more than 40%.

Don't stop now

What happens if you’re one of those diligent rarities who stays invested for an entire 40-year working life? You’ll end up with less than half. At 3%, your investment grows to R30,416. At 1%, it grows to R68,808.

Feeling bewildered?

If all this talk about high fees hasn't left you at a loss for words yet, consider this: although you get R30,416 out at the end, you started off with R10,000. So your money grew by only R20,416. What you don't see is that, over those 40 years, you’ll have paid a total of R23,000 in fees. In other words, you made more money for someone else than you did for yourself.

Don’t just take our word for it. Find out what you’re paying in fees and see for yourself how much more money you could retire with. Click here to learn more about the free cost comparisons we offer.

Hawaii here we come.

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