The costs for a consultant or a financial product are usually well-hidden. For example, the trading costs for the purchases and sales of shares are not even shown in the fund's management fees.
To show you why it’s worth investing in stocks by yourself instead of visiting a consultant or buying a product, let’s look at an example.
Let’s assume that you can achieve an annual return of five percent on stocks. The cost of a consultation or a fund is very different, ranging from 1.5% to 4% of your assets. For our example, let’s assume that the cost is 2% of your assets.
You can see straight away that you can only keep 3% of your 5% yield, while 2% – almost half – goes to the consultant or the product.
To make things even more concrete, we now transfer the example into reality. You are now investing USD 100 francs and letting these USD 100 generate a return over thirty years. After thirty years they have grown to USD 432. Now if 2% of that amount went to the product or the bank, your return would only be 3% (2% of 5% goes to the bank) and after thirty years there would only be USD 243 in the account. That means that USD 189 (432 minus 243) were lost because of bank fees. Now if you don’t save USD 100 but USD 10,000, you’re missing out on USD 18,900 of additional profit!
With the Swiss third pillar, the cheapest banking products cost around 1% in fees and the expected return is 3.5%. If you pay today's maximum amount, which is USD 6,768, into the account for thirty years, you will save USD 360,000, but USD 57,000 will be lost, leaving you only around USD 300,000.
Now you know all the facts and can decide for yourself whether you want to make the investment by means of a consultant or by yourself.
The example discussed in the video has been calculated roughly. Here we show concrete numbers (calculated with the Excel file linked in this article).