Magda Wierzycka on the Fees That Eat Your Future

We often ignore small percentages charged by ETFs, financial advisors, and fund managers. Half a percent here, two points there.

They seem harmless, but in investing, what looks small can over time sabotage everything we’re trying to build.

"As a rule of thumb, if a management fee exceeds one per cent, avoid the product, however enticing it looks."
– Magda Wierzycka

Magda Wierzycka knows this cost better than most. She fled communist Poland with her family at thirteen, landed in Austria with nothing, and arrived in South Africa in 1982 with just $500. From that beginning, she built Sygnia, one of the country's most innovative asset managers, and accumulated a net worth of $250 million.

That background shapes her thinking. She saw how easy it was for the financial industry to charge quietly and steadily, and how quickly that erodes wealth. Let’s say we invest $80,000 over 25 years at a 7% return. With a 0.5% annual fee, we end up with around $386,000. Raise the fee to 2%? Suddenly, our returns plummet to just $271,000. That "tiny" fee has stolen $115,000 from our future.

It brings to mind the story told by Fred Schwed in his classic and hilarious book, Where Are the Customers’ Yachts? A visitor is admiring the beautiful boats docked at the New York marina and is told, “Those belong to the bankers and brokers.” He pauses, then asks: “Where are the customers’ yachts?”

The joke is an indictment. But it's also a warning. If we don’t know what we’re paying, if we don’t challenge every line item, we may be funding someone else’s freedom while forfeiting our own.

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To learn more about Magda Wierzycka, she tells her story in her book, Magda: My Journey.

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