Silent Portfolio Killer
The TER/BER hike email you ignored could cost you more than you think
Everyone has a number and for me it is — a house. Not rented, leased, entirely mine. The satisfaction of owning something you built with discipline is hard to put to words
So like most, I started to invest 10,000 rupees every month into mutual funds. Let it grow while I sleep. Satisfaction and peace of mind that comes with watching your corpus grow and a sense that we are doing the right thing with our hard earned money — there’s nothing like it.
Then one day I received an email with subject — “Change in TER/BER — Schemes of ….”
I had seen emails like this before. Sometimes I would just read the subject, and delete and other times I would glance through the mail. TER — Total Expense Ratio — annual fee the mutual fund houses charge to manage our money. A small percentage is deducted annually from the fund’s value.
The percentage is so small, you’ll never notice it and never feel it go and that is the problem. A 0.02% or 0.04% change, what could it possibly add up to?
In the last year and a half, the frequency of receiving these emails was noticeable. I have invested across multiple fund houses, so I would receive emails from all the fund houses. Each one announcing a small revision, which was very easy to dismiss.
The question stayed on with me a bit longer than I expected.
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So I ran the numbers, had Claude help me. Same SIP, same horizon, keeping the standard market return — two TER values separated by 0.10%
Play with calculator here. Adjust your SIP amount, horizon and TER values to see the results for yourself.
3 lakh lost. Not to market correction, or a bad fund choice but to a fee revision mail that I used to delete all the time.
Don’t get me wrong, I am not saying mutual funds are the wrong choice. I am still invested, and month in and month out my SIP outflow has been constant or growing. But I find myself asking this question that I did not think to ask before — questions I suspect most of us will ever ask until too late.
Is there a better way for the same goal or will I be able to achieve what I had set out to with the current way? As I had mentioned there are so many options to invest like ETFs, index funds, SGBs etc. These options very few people explore because the current path we are set on feels right.
Maybe it still is, maybe compounding wins despite TER drag. But ‘maybe’ is a lot of hope to place on a fee that has moved only in one direction — when it is my dream house on the other end of that SIP.
The email will come again, the question is whether you open it this time — and if you do, what action will you take?
If this resonated, I’d love to hear from you in the comments. And if you’ve found smarter ways to invest around this problem, please share — I am genuinely still figuring this out.
Play with calculator here. Adjust your SIP amount, horizon and TER values to see the results for yourself.
