Investment Fees Analysis

This is a follow up to my post on Sunday, September 14: Checking Mutual Fund and ETF Expenses.

Keeping investment expenses low is one good way to increase one's investment returns.  Typically, there are management fees, operational fees (12b-1), and load (commission to seller) fees.  Here's the types of investments and the range of fees in one account we have:

	Yearly Fees
Type of Investment	Management	Operational 12b-1	One Time Load        Front End
Stocks	0%	0%	0%
Bonds	0%	0%	0%
ETFs	0.03-0.77%	0%	0%
Mutual Funds	0.4 -1.5%	0-0.25%	0 - 5.75%

  

The lowest cost option is 0% if one owns individual stocks and bonds since no commission is charged.  This requires the investor to research and choose their own stocks and bonds.  The next level are ETF fees.   Most index ETFs have fees below 0.2%.  The higher fees are usually associated with actively managed ETFs.  The highest level of fees is for mutual funds.  In addition to management fees, mutual fund sometimes charge operational fees, known as 12b-1, for marketing and shareholder service costs. Some mutual funds also have initial "load" charges, which are typically 3-5% of the purchase price, as a one time fee, which is sometimes waived for brokerage clients.

Yes, we have some high fee mutual funds, but we also have some low fee stocks, bonds and ETFs.  To determine the fees on the entire account, I calculated the proportional management and 12b-1 fee of all the investments in stocks, bonds, mutual funds and ETFs.  The effective fee for all the investments was 0.38%, which is the total fee since load fees are waived for clients of this brokerage.  0.38% per $10,000 is a $38 fee per $10,000 invested, which I consider a reasonable annual investment fee for the entire account. 

For more on The Practice of Personal Finance, check back every Wednesday for a new segment.

This is not financial nor investment advice. Please consult a professional advisor.

Copyright © 2025 Achievement Catalyst, LLC