Even 1% Investment Costs can Eat Away Your Long-Term Returns

From the moment you start investing, there comes a spate of associated costs and fees you need to be aware of. These seemingly meager expenses can accumulate over time, gradually depleting a significant portion of your hard-earned profits. That’s why before investing, investors should always pay attention to all different types of investment fees, which can save them substantial opportunity costs amounting to hundreds of thousands.

Investing comes at a cost

Take dividend-paying products, for example, the fees generally come in two types: one-time and ongoing:

One-time fees: Typically, if a customer at a leading bank in Hong Kong invests in a bond fund through the bank’s online platform, the bank will impose upfront fee, redemption fee, conversion fee, and other one-time charges.

Ongoing fees: The fund manager overseeing the bond fund will continuously charge an ongoing fund-level fee every year, also known as an Expense Ratio. Generally speaking, all the fund-level fees are included in the fund’s Net Asset Value (NAV), or reflected in the trading price.

Why can these fees “Compound” into a large amount of money?

While these fees may seem insignificant at first, they certainly add up over the long term with the compounding effect. Not only do the investors have to pay a fixed fee, but the recurring fees also reduce the overall potential of compound interest investors could earn.

Imagine investing $100,000 HKD into a product that yields an 8% annual return over the next 25 years. In a cost-free scenario, investors would anticipate a return of $585,000. However, with an operating expense of merely 1%, the potential return will be reduced by $112,000; and with a 2% fee, the potential return can be further reduced by a staggering $238,000.

How to enjoy institutional premium investment service with low-cost

Syfe fully understands the needs of investors and aims to reduce investment costs in two ways, while providing services that were traditionally exclusive to institutional investors only.

On one hand, Syfe has eliminated all of the one-time fees, including subscription fees, withdrawal fees, and conversion fees. This allows us to bring you the flexibility to enter and exit the market whenever you want, without incurring any extra expenses.

On the other hand, Syfe significantly reduces long-term investment costs by fully rebating the trailer fee –– the fee that fund companies pay to distributors (typically security firms or brokers) –– back to our clients. Take Income+ Enhance, for example. Syfe passes on any trailer fee rebates received from the fund companies straight to our clients, resulting in a nearly half-price reduction in fund-level expenses compared to similar products in the market, which helps our investors reduce long-term investment costs.

On top of that, with Syfe’s discretionary investment fees, our clients can enjoy institutional investment services provided by our team of experts consisting of professionals from UBS, Goldman Sachs, and Morgan Stanley –– starting from as low as 0.35% to 0.65% only. These premium services include actively managed funds, wealth management, client investment workshops, dividend reinvestment plan, and so much more.

Finally, Syfe has successfully reduced the initial investment costs of Income+ Enhance to a range of 0.91% to 1.21%, which is significantly lower than any other online investment platforms, private banks, and retail banks.
Learn more here: https://www.syfe.com/hk/magazine/income-plus-investment-strategy-learn-more/