How to Think About Investing Costs (Simple Framework)

Good investors do not only ask: “What return can I get?” They also ask: “What return will I keep after costs?”

The 4 cost layers

• Product cost: ETF TER
• Broker cost: commission / custody / inactivity fees
• Execution cost: spread and slippage
• Currency cost: FX conversion and FX spread

Simple formula mindset

Net expected return ≈ market return − total annual costs

Even 0.5%–1.0% annual cost gap can create very large differences over long horizon.

When costs become dangerous

• Frequent trading
• Small monthly amounts with fixed commissions
• Repeated FX conversions
• Stacked products with multiple fee layers

Cost-first checklist before investing

• I know TER of each ETF
• I know yearly broker/platform fees
• I know per-order commission and spread impact
• I know FX conversion model for my account
• I estimated yearly total cost in euro and %

Practical rule

Keep portfolio structure simple, trade less, and avoid unnecessary cost layers. Cost control is one of the easiest ways to improve long-term outcomes.

Related tools: TER Impact Calculator · Commission Calculator · Broker Comparison

Educational content only. Not financial advice.