Money Guidance

Investment Fee Impact Calculator

Fees are the only input to your future returns that you can know in advance, and the only one you fully control.

Last reviewed: Written and checked by the Money Guidance editorial team
years
%

Before any charges.

%

Fund charge plus platform fee.

%

Why a small percentage costs so much

A 1 % annual fee does not cost you 1 % of your final balance. It costs far more, because every pound taken in charges also forfeits all the growth that pound would have produced for the rest of the period.

Net return = gross return − total annual cost Final value = P × (1 + net/12)^months + PMT × [((1 + net/12)^months − 1) ÷ (net/12)]

The effect is non-linear in time. Over five years, a one-point fee difference is barely visible. Over thirty, it commonly consumes a quarter of the outcome. This is the same compounding that works for you, running in reverse.

Finding your actual total cost

Most people underestimate what they pay, because the charges are in several places and only one is advertised:

  • Ongoing charge (OCF or TER) — the fund's own annual cost. This is the advertised number.
  • Platform or account fee — charged by the broker, either as a percentage or a flat amount.
  • Transaction costs within the fund — the fund's own trading, disclosed separately and outside the OCF.
  • Dealing commission and spreads on your own trades.
  • Foreign exchange charges on overseas holdings.
  • Adviser fee, if you use one.

Add them together and enter the total. For a self-managed portfolio of index funds, 0.2–0.4 % all-in is achievable in most markets. Above roughly 1 % without advice, it is worth asking what you are receiving in exchange.

Percentage or flat fee

Platform charging structures matter more as a portfolio grows. A percentage platform charging 0.25 % costs £25 a year on £10,000 and £1,250 on £500,000, for the same service. A flat-fee platform charging £150 is the reverse.

The crossover is typically between £50,000 and £100,000. Many people choose a platform when their portfolio is small and never revisit the decision, which quietly becomes expensive. Recalculating every few years is worth the twenty minutes.

Note also that some percentage platforms cap charges on shares and ETFs but not on funds. Where that is the case, the vehicle you choose affects the platform cost as well as the fund cost.

Frequently asked questions

Is a 1% fee really that bad?

Over long periods, yes. Run the numbers above with a 30-year horizon — the difference between 0.25 % and 1.25 % is typically a quarter of the final balance. Whether it is worth paying depends entirely on what the extra buys, and for a mainstream index-tracked portfolio it usually buys nothing.

Do fees come out of my account?

Fund charges are deducted from the fund's assets, reducing the unit price rather than appearing as a transaction — which is why they are easy to overlook. Platform fees are usually charged visibly.

Should I switch platform to save fees?

Often worthwhile for larger portfolios. Compare the annual saving against exit fees and any time out of the market. An in-specie transfer moves holdings without selling and avoids the latter.