Mutual fund brokers make about 1.5% on equity mutual funds. That amounts to 40% of your total wealth over time as this commission compounds. So if you invest and make Rs 5 crores (Rs 50 million) over 20 years, then the broker/agent might make about Rs 2 to 2.5 crores. Enough to buy the stuff you mentioned above!
Quote from Terrance Smith, an acclaimed investor in the UK, that
If you’d invested $1,000 with Warren Buffett in 1965; it would currently become a nest egg of $4.3 million. However, if Berkshire had been a hedge fund charging 2 & 20 (2% annual fees and 20% share in profit), that $4.3 million would have accrued $300k to the you with a stunning $4m to the manager
– Terry Smith in 2010
How do you escape this? Buy Direct Plan Mutual Funds that removes the commission completely.
