Tyranny of Compounding Costs

John Bogle, the founder of The Vanguard Group, Inc., concerning what Bogle calls the "tyranny of compounding costs" in mutual funds, published this many years ago.
This table breaks down Bogle's example of the impact of compounding -- and compounding costs -- over the long term. On the left it shows the growth on $1,000 invested by an individual at age 20 until his/her death at age 85, assuming 8 percent annual growth. On the right, it shows what happens to that same $1,000 over the same period assuming a 2.5 percent annual cost, such as a mutual fund management fee.

Check out age 65 and the difference in the amount of money:  $34,400 dollars versus $ 11,127 !  Over the 65 years, these annual fees eat up a staggering 79 percent of what the investor would have earned with no management costs.