Commissions are the elegant way of saying "we're taking your money".
How they work (and why you don't notice)
You invest €1,000 in a fund. The bank managing that fund says "we take 1% annually for management".
1% of €1,000 = €10. Seems like nothing, right?
Here's the problem: you don't notice because it's subtracted automatically.
It's like having a friend who steals €0.30 from your wallet every day. You don't see it. But in 30 days €9 disappeared.
Seems small... until you do the math
You invest €1,000 at 7% annual return for 30 years.
With 1% commission (traditional bank): You end with €5,700.
With 0.1% commission (index fund): You end with €7,000.
The difference is €1,300. From a 0.9% commission difference.
But invest more: €10,000 with 1% vs 0.1% commission...
Difference = €13,000.
That's a vacation. Or a car. Or saved to retire 2 years earlier.
The bank's "secret"
Traditional banks charge 1-2% because they have branches, employees, a cafeteria, all that costs money.
But that cost isn't yours. Why do you pay it?
Online brokers (Degiro, Interactive Brokers) don't have branches. It costs less. They charge you 0.1-0.3%.
Same money invested. But you lose €1,000 less in the process.
Where commissions are charged (and how much)
Active management funds (bank): 1-2% annually → The manager tries to be clever. Sometimes wins. Sometimes loses. Costs a lot.
Index funds (online): 0.1-0.3% annually → Doesn't try to be clever. Just copies an index. Works better and cheaper.
Traditional broker per trade: €5-€20 per buy/sell → Theft.
Online broker per trade: €0-0.1% → Fair.
The uncomfortable truth
That €1,300 extra wasn't "magically" generated. It was money YOU earned that the bank kept in commissions.
Money YOU sacrificed for. And someone else took because you chose the wrong fund.
Choose the right fund. You'll save a fortune.