As with everything, investing comes with a price \u2013 you just need to figure out what it is, and whether it\u2019s worth paying for. Nobody likes paying fees, but fees you don\u2019t understand or even know about are worse. Many fees are unavoidable, but some can be reduced or completely eradicated with some planning. Find out how to navigate the choppy waters of investment fees to help you make your money go further and compare the fees involved with each provider. <\/p>
There are several different fees involved when you invest \u2014 it\u2019s worth making sure you know what each one is for. Each broker might have slightly different names for its fees, but in general, these are the ones you\u2019ll come across:<\/p>
These fees can have different names across various platforms. Likewise they can come bundled together or be charged separately to add a bit more confusion. Let\u2019s go into a bit more detail about what each one means.<\/p>
| Name of fee<\/th> | Also known as\u2026<\/th> | What\u2019s it for?<\/th><\/tr><\/thead> |
|---|---|---|
| Platform fee<\/th> | Custody fee<\/td> | Similar to the management fee and in some instances may be bundled with it. This is the amount you pay to the platform or brokerage you\u2019re using that helps cover their costs of running the business and keeping the platform operational. Sometimes this is a flat fee and other times it may be a percentage based on the size of your portfolio.<\/td><\/tr> |
| Transaction fee<\/th> | Brokerage fee, commission, entry and exit costs, front-end load or back-end load (mutual funds only)<\/td> | This fee can be charged every time you make a transaction, whether it be a buy or a sell. These fees can be either a set amount per trade or a percentage of the transaction amount. If you are buying and selling lots of small shares, these fees can add up quickly.<\/td><\/tr> |
| Management fee<\/th> | Ongoing charges, fund management fee, total expense ratio (TER), internal expenses, total annual charge (TAC), annual account fee.<\/td> | This fee is generally paid as a percentage of the managed fund and is paid to the fund\u2019s advisor for their advisory and management services. Depending on the company, this fee may also cover administrative services related to the fund as well.<\/td><\/tr> |
| Trustee fee<\/th> | N\/A<\/td> | This fee usually only applies to SIPPs<\/td><\/tr> |
| Advice fee<\/th> | Ongoing advice fee, fee for advice, financial advisor fee<\/td> | This is the fee you will pay if you choose to seek the advice of a financial advisor to assist you with your investments and the related decision making.<\/td><\/tr> |
| ISA fee<\/th> | N\/A<\/td> | This is the charge for investing in an individual savings account (ISA), which lets you pay less in capital gains tax.<\/td><\/tr><\/tbody><\/table>Know your fees<\/h3>As we\u2019ve seen, fees vary hugely between brokers. They can also vary between types<\/em> of investing. SIPPs for example will often have the management and custodian fees bundled as they will probably be offered by the same provider.<\/p> |