- Fees are charged on your whole pot, every year.
- An extra 1% over 30 years can cost roughly £27,600 on £200 a month.
- Cheapest isn’t always right, but know what you pay.
Fees are quoted as small percentages because small percentages don’t frighten anyone. But they’re charged on your whole pot, every year, including the part you earned decades ago.
The sum
Take £200 a month for 30 years at 5% a year before the extra charge. This is an illustration, not a forecast.
- With no extra fee, you’d end up with about £166,000.
- With an extra 1% a year, you’d end up with about £139,000.
That’s roughly £27,600 gone, and you’d never see a bill for it.
Where to find the fees
- Ongoing charge: on the fund’s factsheet.
- Platform fee: what your ISA or pension provider charges to hold it.
- Dealing costs: charges for buying and selling, if any.
Is cheap always right?
No. Shariah screening costs money, and the choice of compliant funds is narrower, so you may not find the cheapest option in the market. The aim is knowing what you pay and whether you’re getting something for it.
If you spot a mistake, tell us and we’ll fix it.
Capital at risk. Investments can fall as well as rise, and you could get back less than you put in. Past performance is no guide to the future. Nothing here is a recommendation to buy any fund or platform.
