Investing term
What is Fee drag?
The cumulative effect of every fee you pay on the return you actually keep.
Fee drag is the compounding cost of every fee you pay — expense ratios, commissions, platform charges — on the wealth you actually keep. Because fees come out every year and the money they take can no longer compound for you, their long-run damage is far larger than the headline percentage suggests. Cutting fees is a guaranteed boost to net returns.
For example
Two identical 7% portfolios over 30 years: one charging 0.1% in fees, the other 1%, can end up tens of percent apart — that gap is pure fee drag.
Fee drag is taught hands-on in Stage 9 — Fees, Scams & Protecting Your Money.
See the lesson →