My First Million
The best business ideas come from noticing what's working and doing it better, faster, or for a different audience.
Percentage-Based Fee Invisibility Model
People underestimate the long-term cost of percentage-based fees because they don't feel the pain of the payment, unlike lump-sum fees
Decision Rule
When evaluating financial services, convert percentage fees to dollar amounts over relevant time periods to make costs visible
How It Works
Percentage fees are automatically deducted from assets, creating psychological distance from the cost. Compound effect over decades makes the true cost exponentially higher.
Failure Modes
Ignoring compound effect of fees on final wealth
Not converting percentages to absolute dollars
Focusing on service benefits while ignoring cost structure
Comparing services based on percentage rates rather than total cost
Example Decision
“Goldman Sachs 1% fee seems reasonable until you realize it costs $100k annually on $10M portfolio, or $10M+ in lost compound growth over 30 years.”