Investing fees are hard to understand. We're often asked how Selma's price differs from the complicated fees of a classical bank. Our transparent prices keep you safe from nasty surprises. Here's a real life example of why you need to be careful with offers that look cheap on the first glance.
Our client asked us to compare our offer with an offer he got from a Swiss bank. Out of friendliness, we will not publish this bank's name. The costs are not estimates, but real numbers found on the bank's webpage and in its fund prospects.
| a. Selma | b. Example mutual fund |
Investment amount | CHF 10'000 | CHF 10'000 |
Annual management fee | 0.68% (max) | 0.60% (cheapest fund) |
Product's own costs | 0.22% (average) | 0% |
Transaction fee | 0% | Beware of the small print* |
* This is what was written on the bank's page: "Die Total Expense Ratio’ (Gesamtkostenquote) zeigt an, welchen prozentualen Anteil des Nettovermögens die Kosten bei einem Fonds pro Jahr ausmachen. Als Kosten gelten dabei alle Aufwendungen gemäss Erfolgsrechnung, einschliesslich Management-, Verwaltungs-, Depot-, Revisions-, Rechts- und Beratungsgebühren. Nicht berücksichtigt werden die Transaktionskosten im Fonds."
| a. Selma | b. Example mutual fund |
Asset based fee | 0% | 1% |
Exit fee | 0% | Specific information missing |
Swiss tax statement | included | CHF 10 per fund, min. CHF 25 + VAT |
Deposit costs | 0% | Minimum CHF 90/year |
Total costs | 90 CHF/year | 290 – 353 CHF/year * |
* Unfortunately, we couldn't calculate the costs precisely, because of the unclear transaction costs.
What does that mean in practice?
Let's assume you would earn a stable 5% return on your initial CHF 10'000 investment every year.
After 15 years, in 2032, once robots have taken over the world and Elon Musk has built a Hyperloop from NY to Paris, this is where you stand:
| A. Selma | B. Mutual Bank |
Initial investment | 10’000 | 10’000 |
Return on investment | 5% | 5% |
costs in the first year | 0.90% | 2.90% |
running costs | 0.90% | 1.90% |
Account balance in 15 years | + 18'270.9 | + 15'650.05 |
Profit in 15 years | 8'270.90 CHF | 5'650.05 CHF |
Because of the compounding costs the difference is staggering 2'620.85 CHF. It's 26.21% of your initial investment!