I have an investment that grows at 5%, 10%, and 8% in three consecutive periods. I would therefore expect the investment to grow to (1.05)(1.10)(1.08)=1.2474 of the original value.
Now let’s say there have been two separate charges made in each period, tax and management fees of 1% and 2% respectively in each period.
So now my investment has grown as follows
Period 1: 5% growth less 1% tax less 2% fees giving 2% net growth.
Period 2: 10% growth less 1% tax less 2% fees giving 7% net growth.
Period 3: 8% growth less 1% tax less 2% fees giving 5% net growth.
So my investment has grown (1.02)(1.07)(1.05)=1.14597.
The expected growth of 24.740% has been consumed by charges of 10.143%
Overall % charges can be calculated by the formulae
(1+Exp1) (1+Exp2)(1+Exp3) - (1+Exp1-3%) (1+Exp2-3%)(1+Exp3-3%)
(1+.05) (1+.10)(1+08) - (1+.05-.03) (1+.10-.03)(1+.08-.03)
The question:
is it possible to calculate the cumulative % impact of taxes and fees separately. Any help appreciated
Now let’s say there have been two separate charges made in each period, tax and management fees of 1% and 2% respectively in each period.
So now my investment has grown as follows
Period 1: 5% growth less 1% tax less 2% fees giving 2% net growth.
Period 2: 10% growth less 1% tax less 2% fees giving 7% net growth.
Period 3: 8% growth less 1% tax less 2% fees giving 5% net growth.
So my investment has grown (1.02)(1.07)(1.05)=1.14597.
The expected growth of 24.740% has been consumed by charges of 10.143%
Overall % charges can be calculated by the formulae
(1+Exp1) (1+Exp2)(1+Exp3) - (1+Exp1-3%) (1+Exp2-3%)(1+Exp3-3%)
(1+.05) (1+.10)(1+08) - (1+.05-.03) (1+.10-.03)(1+.08-.03)
The question:
is it possible to calculate the cumulative % impact of taxes and fees separately. Any help appreciated
