How Many Times Do You Lose When The Market Drops?

How many times do you lose in a down year when you have โ€œmanaged fundsโ€ where you pay management fees. ๐Ÿค”

In a down year your investment portfolio/retirement account loses money. So you lose once just from the market dropping.

Your financial guy still charges you the same fees when youโ€™re losing money as when youโ€™re gaining it. So even though they lost you money in a down year theyโ€™re charging you โ€œmanagement feesโ€ plus any other account fees associated with managed accounts. Now youโ€™ve lost twice.

Then, if your financial guy can make that money back, theyโ€™ll charge you fees again just to get you back to break even. Now youโ€™ve lost three times.

Still donโ€™t understand? ๐Ÿค” Hereโ€™s an example:

If you start at $100,000 and your account drops to $80,000 thatโ€™s a 20% loss, but itโ€™s really greater than that because your financial guy is going to take their fee out too. Even though they lost you money, theyโ€™re still going to charge you. Thatโ€™s losing twice.

Then to get your account back to $100,000 you need a 25% gain. So during that entire period of gains (however long that takes), your financial guy is going to charge you more fees. Now youโ€™ve lost three times.

To recap, you gave them $100k and paid them a bunch of fees just to be back at $100k. If you don’t think things like that happen, I’ll direct your attention to the time period between 2000-2013 where the market dropped 45.55% from 2000-2002 and it took until 2013 just to get back to break even.

You can grow your retirement funds without fees and without the risk of loss. That’s what I help my clients do.