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Glossary entry · The silent subtractors
Tax
Definition
The portion of investment gains the government takes — on dividends, on interest, on profits when you sell. Tax-advantaged accounts (pensions, ISAs, 401(k)s) reduce or defer this drag, which over decades adds up to a lot.
Example
A 19% tax on a €1,000 gain is €190. Compounded across decades of trades, this drag rivals the effect of fees.
Related
The silent subtractors
Fee
A charge taken from your investment by a fund, broker, or advisor — every year, forever.
Read →Expense ratio
The annual fee a fund charges, expressed as a percentage of your investment.
Read →Commission
A fee charged by a broker each time you buy or sell. Mostly $0 with modern brokers.
Read →Tax-advantaged account
An investment account where the government reduces or defers your taxes.
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