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When we build wealth the Wall Street way, we drag two boat anchors for our entire investing lifetime.  Their names are taxes – and fees/commissions.

Both take a toll on our account, but only one gets the attention.  Accountants, CPAs, and law firms exist largely to minimize tax exposure.  Why?  Tax rates can eat up more than 40% of gains, and even the average investor likely gives up 20-30% of their growth to taxes.

Fees and commissions are harder to pin down because they’re so well disguised and hidden from plain sight.  Estimates run from about 1% – 5.5% of the annual account balance (401k and similar plan savers are at the higher end of the range).

For our discussion, let’s make 4 assumptions:

  1. Our “Saver” will set aside $6,000/year ($500/mo) from age 30 – 65
  2. Their account will grow at 10%/year compounded
  3. Fees/commissions are 2% of the annual account balance (before taxes)
  4. Taxes are 25% on the growth amount after fees/commissions,

Here’s the big question.  What will cost more over an investing lifetime – taxes, or fees/commissions?

The answer may shock you.  Our hypothetical saver will pay $200,471.40 in fees and commissions; and $198,400.64 in taxes over the accumulation phase of their lifetime.  In other words, fees and commissions will consume as much (or more) wealth than will taxes.

Here’s an alternative:  Build wealth in a way that eliminates the ravages of taxation; and guarantees to refund all fees and commissions to your estate.  Want to know how?  Post a reply – and I’ll show you.