"Verwacht rendement" - how is it calculated

[finrod2002]

Hello,

I have a question regarding the expected return ("Verwacht rendement"). As far as I understand this is calculated based on the inputs given (expected returns, expected dividends) minus the total costs. Therefore, I would assume that for all the sugested portfolios the sum

totalCosts + expected return

would be the same?

Actually, this doesn't seem to be the case. So what else do you factor in in the expected return? Is it the average index return of the last X years or something else?

I apologize if this a stupid question with an obvious answer written somewhere I couldn't find.

[jakedane]

You forgot about compounding. Everything else being the same, higher total costs don't just diminish your expected returns in year 1 but in every year after. With less money invested at the end of year 1, due to higher total costs paid, the returns for year 2 will be lower as there is less money invested to earn returns on. That's even before accounting for higher total costs to be paid also in year 2. The longer your investment horizon is the more costs compound to diminish your expected returns.

The total costs are what you pay. Your expected returns are diminished by more than that because you can't earn future returns on costs paid.

[finrod2002]

I've tried selecting 1 year and same broker for different fonds option. Even than the sum doesn't add up. Or does it has to do with quarterly dividend payments or something like that?

[finrod2002]

I've attached my input to give more clarity.

[jakedane]

Same thing. Higher transaction costs on that 700.000 you pay at the start, that doesn't earn returns the rest of the year. Fund costs and dividend leakage I assume are accounted for on monthly basis so also those being higher would diminish returns the rest of the year.