'Finfluencers say you lose crores in MF fees': Advisor drops truth bomb on SIP myths

That viral promise—“Invest ₹10,000 a month for 30 years and get ₹3 crores!”—might sound like a ticket to easy retirement, but investment advisor Varun Vaid is urging investors to look beyond the headline numbers and understand what really eats into wealth: not commissions, but inflation, taxes, and hype.

In a post on X, Vaid, a mutual fund advisor, dismantled the myth that commissions are the biggest threat to long-term returns. “Many finfluencers claim you lose crores in commissions by simply deducting a flat 1% commission from your final corpus. This is wrong math,” he wrote.

According to Vaid, commissions are deducted annually, and they decline over time—starting around 1% in the early years and tapering down to 0.25% or lower as assets mature. “Real distributors do NOT earn 1.5% commissions on your entire portfolio every year for 30 years,” he clarified. The actual total commission paid? Typically in lakhs—not crores.

Instead, Vaid pointed to inflation and long-term capital gains tax as the real culprits behind diminished purchasing power. Even if a fund delivers 12% annual returns, 6% inflation and taxation can erode the real value significantly. “So, ₹3 crores gross looks more like ₹40–45 lakhs in today’s money,” he noted.

He also emphasized that mutual fund returns are already net of expenses, including commissions. What’s quoted as a 12% return is before costs—most investors ultimately see 11–11.5% after fees, making exaggerated fear-based claims about "crores lost" to commissions not just misleading, but mathematically flawed.

Vaid cautioned investors against what he called “overhyped simplifications” and urged a shift toward direct plans, tax-optimized strategies, and disciplined investing. “Simplistic, fear-mongering numbers… mislead investors and push them to wrong decisions,” he warned.

The bottom line? Real wealth creation isn’t about obsessing over commissions—it’s about cutting costs where possible, understanding post-inflation returns, and planning around tax realities.

Mutual fund distributors (MFDs), he added, play a vital role in this process—helping investors choose the right products, optimize tax impact, and manage risks.