What you’re really paying
A charge of 1% or 2% a year sounds small. But it’s taken every year from the whole pot, including the growth it would have earned, so over a working life it can cost a third of what you’d otherwise have. After inflation, a 1.5% charge can take over 40% of your real growth, every year, whatever the market does. Put in your own numbers.
Fee calculator
Do it yourself with trackers
Active funds on a platform
With a financial adviser
| After 25 years | Your pot | Lost to costs | Share of the no-cost pot |
|---|---|---|---|
| Do it yourself with trackers | £384,948 | £32,532 | 92% |
| Active funds on a platform | £328,018 | £89,462 | 79% |
| With a financial adviser | £280,386 | £137,094 | 67% |
| With no costs at all | £417,480 | – | 100% |
The cheapest option leaves you £104,562 more than the dearest after 25 years: the difference between £384,948 and £280,386, on £140,000 paid in. “Lost to costs” is the charges themselves plus the growth they would have earned.
Where the costs come from
- The fund’s own charge (the ongoing charges figure, or OCF), taken inside the fund’s price. Index trackers charge far less than actively managed funds.
- Transaction costs inside the fund, from its own buying and selling. Busy active funds have more.
- The platform that holds your ISA or pension: either a % of your pot or a flat fee. A flat fee gets cheaper as a share of the pot as it grows; enter it in “Flat fees a year” to compare.
- Advice, if you pay an adviser an ongoing %, on top of everything else.
- Dealing charges for buying and selling shares or funds yourself, which add up if you trade often.
Every fund and platform has to publish its charges. Before you invest, look for the fund’s ongoing charges figure in its key information document, and the platform’s charges page, then add them up for your pot size.