A friend asked me to look at two funds. She'd been putting money into a mutual fund for years. Someone mentioned she could buy an ETF instead, same holdings, lower cost.
We pulled up the details. Her mutual fund held exactly one thing: a Canadian index ETF. That's it. The fund's entire job was to own shares of an ETF you could buy directly.
The mutual fund charged a 1.27% annual fee. The ETF itself? 0.06%.
She was paying twenty times more for a wrapper around the thing she actually wanted.
"But it's only 1%," she said. "Is that really a big deal?"
That question is the whole story.
The wrapper problem
This particular situation is more common than people realize. Some mutual funds don't pick stocks or run complex strategies. They simply hold an index ETF and charge you for the privilege of accessing it through their platform.
The fund does almost nothing. The fee does almost everything.
When you buy the ETF directly, you skip the wrapper. Same investment, same returns, dramatically lower cost. The difference compounds quietly for decades.
What a 1% fee really costs
A fee is not a one-time expense. It's a tax on every future gain.
If the market earns 7% and your fee is 1%, that fee takes about 14% of your annual return. Every year. Compounding against you instead of for you.
This is hard to feel in real time. The cost is invisible because it doesn't arrive as a bill. It arrives as a smaller number decades from now (a number you'll never see, because you won't know what you missed).
Forty years of quiet erosion
To make the pattern obvious, strip it down to a clean example. Start with $10,000. Grow it at 7% per year. Then compare what happens over 40 years with different fees: 0%, 0.5%, 1%, and 2%.
The cost of small fees over 40 years
The green line is what you'd have with no fee. Each colored line below it shows a small fee, compounding its way downward year after year.
A 1% fee doesn't cost you 1%. It costs you nearly a third of your wealth over a lifetime. The 2% fee costs you more than half.
This isn't a trick or a worst-case scenario. It's just math, applied honestly over time.
The habit
When you see any recurring fee, ask: "How much will I pay this over 30 years?" The annual number hides the truth. The lifetime number reveals it.
Small fees are everywhere
Once you see the pattern in investing, you start noticing it in other places. The same principle applies: small costs, repeated, compound into something much larger than they appear.
In money
- Subscriptions you forgot about, quietly renewing
- Convenience fees that seem too small to avoid
- Higher-interest debt you keep meaning to refinance
- The premium product when the basic one would do
Each one is "just a few dollars." Over years, they become thousands.
In health
- A drink most nights, because it's just one
- Skipping the floss, because your teeth feel fine
- Sitting all day, because standing takes effort
- The snack you don't need, eaten out of habit
Tiny today. Compounding against you for decades.
In time
- Saying yes to every meeting, because declining feels rude
- Checking your phone between tasks, because it's just a glance
- Waiting for things you could automate or eliminate
- Low-value commitments you keep because you already agreed
Minutes leak. Hours vanish. Years pass.
The reframe
Small repeating costs are rarely neutral. They're a quiet vote for a future you didn't consciously choose.
This isn't about guilt. It's about clarity. When you see a small cost clearly, really see it, stretched across time, you get to decide whether it's worth it. Most people never look.
Balance is built for this kind of thinking. It helps you see the long arc of your money, track where it actually goes, and make steady choices that compound in your favor.
Start this week
Pick one small recurring cost and make it visible. Write down what you pay monthly, then multiply by 12, then by 30.
That's what it actually costs.
You don't have to eliminate every small expense. But you do have to see them honestly. The math is patient. It compounds whether you're paying attention or not.
One small change, made early, can be worth more than a dozen dramatic ones made late.
Look at your fees. The small ones are the ones that matter most.
Thanks for reading.