The Hidden Costs Draining Your Investment Returns & How To Avoid Them

Imagine unlocking a guaranteed boost to your investment returns, year after year, without taking on any extra risk. This may sound too good to be true, so in this video, I'll be looking at the world of hidden fees and costs that are silently draining your investment portfolio. But rest assured, I will also be showing you what you can do to help sidestep these pitfalls and keep your money where it belongs - working for you.

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Timestamps
00:00 Introduction
00:32 Why Fees Matter
01:16 Compounding Effects of Fees
03:14 Primary Fees for Investors
05:40 Subtle Hidden Fees
06:56 Bid-Offer Spread
08:31 Currency Conversion Costs
12:15 Fund Domicile and Withholding Tax
14:37 Synthetic Funds
16:27 Effect of Currency Hedging
19:33 Tracking Error
22:35 How to Minimise Costs

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DISCLAIMER
All information is given for educational purposes and is not financial advice. Ramin does not provide recommendations and is not responsible for investment actions taken by viewers. Figures that are quoted refer to the past and past performance is not a reliable indicator of future results.

[goodq]

Sincerely amazing video. The level to which you take this analysis is amazing. Thank you !

[MadderPrinciple]

Excellent video - people often forget or don't realise that fees compound as well!

[erikwaldheim]

Thank you, real currency hedging costs were always a bit of a mystery to me.

[MichaelBaker-fo]

Do free platforms make more money from the bid offer spread than platforms that charge a fee? Value for money can only then be judged in terms of the number of transactions you make. How an earth do you evaluate this?

[palmtree-el]

Great video. I had a Luxembourg fund which I switched to Ireland. It's surprising how small percentages make such a big difference.

[jambojack]

How come synthetic ETFs stil pay out dividends if they don't receive them e.g. XWD1?

[MarkCW]

Thanks Ramin, I always learn something new from your channel. I hadn't thought of where my ETF is domiciled being important before. So good to learn this information. Fortunately all of my ETFs are domiciled in Ireland with the exception of 2 which are based in Luxembourg that don't pay any dividends.

[brianheath]

Would be nice for more AT RETIREMENT videos. Fees play a big part in overall "take home" from funds. Would be great to see some good examples of implementation - e.g. x years easy access cash, longer term investments. How to use drawdown effectively. Too many vids out there explaining the options but none really go into how you would implement and manage going forward in retirement. I think it's great to get all this financial education out there to ensure folks understand what they need to do to build up their wealth pre-retirement. Please let's do more at-retirement vids.

[fcv-ewgk]

What about transactions costs within a fund? Depending on which index an ETF tracks, this can be significant.

[JulianneKnaebel]

Your video was exactly what I needed to hear to overcome my fears and start trading. Thank you for the motivation!

[quintonlee]

Ramin, excellent video again and fantastic points of interest rate differences on currency hedging! I am curious with your individual stock investments, have you had much luck using models such as DCF or valuation multiples to find positions? I'd like to know your experiences with them.

[yordanpavlov]

Thank you Ramin, a gem of an episode!

[MaciejBiernat]

Thank you very much for this video and all the previous. It is very helpful. You mentioned in your other videos that the majority of your portfolio is in FTSE Developed World UCITS ETF (VHVG/VEVE) denominate is in USD, what is the advantage of that denomination in USD over similar found you had before FTSE Developed World ex-U.K. Equity Index Fund (VDWXEIA) in GBP. The fee difference is 0.02%, but there is an additional one-off fee and higher transaction cost so in total accumulation versions difference is 0.06% + denomination in USD according to vanguard's 'Personal investor costs and charges information'. I'm very couriues as I hold both founds and I would like to switch to one. Many thanks in advance for your perspective.

[daveabc]

What about paying for performance? Is that worth it? When in retirement with more bond funds and more diversity.

[Duncan]

Ramin, perhaps outwith the scope of your channel, but wondering if you would be able to do a video on home buying (i.e. higher/lower LTV vs investing what would be left over).

[mthw]

Some platforms allow you to pay their fee independent of your investments. That way you can stop it reducing the value of your fund(s) completely (assuming you don't mind paying it separately).

[josephhughes]

Trying to minimise fees currently and had no idea about the bid offer spread…

[joshhorton]

If TER is an ongoing cost that is captured in the fund share price, why do we care about TER above the tracking difference/historic performance? And if a fund consistently outperforms its index why should I care about its TER at all? For background I use VWCE and am considering FWRG.

[alexm]

Luxembourg c.f. Ireland was a revelation! 😊

[Crazydiamond_]

Very informative, I’m keeping this on my watch list