The lowdown on low fees

costs

Costs matter in investment: paying lower fees means you get to keep more of the returns your investments make. 

For example, consider a £10,000 investment earning a theoretical return of 5% a year for 20 years — and charging annual fees of 0.5% or 1%.

While the difference between paying 0.5% and 1% a year may not seem much, over time it can amount to a shocking reduction in your returns. 

With management fees of 0.5% deducted from the 5% annual return, your £10,000 could grow to an impressive £24,117 over 20 years.  

But, with fees of 1% a year, the same £10,000 would grow to only £21,911. 

That’s a whopping £2,206 less, simply from the half-percentage point difference in fees. 

Annual feeInvestmentIllustrative returnValue after 20 years*
0.5%£10,0005%£24,117
1.0%£10,0005%£21,911
*Net of fees after 20 years, assuming 5% p.a. returns

Pay less, keep more with InvestEngine 

At InvestEngine, we charge just 0.25% a year — one of the lowest fees around for managing investment portfolios. 

And we have no initial fees, no dealing fees and no withdrawal fees. 

Our 0.25% management fee is the same whichever account type you choose (unlike some investment firms, we don’t charge extra for a tax-free ISA). 

And while our portfolios comprise exchange traded funds (ETFs) with their own costs, these are also low: 0.21% a year on average for our Growth portfolios.1 

Taken together, this means that total annual costs on our Growth portfolios are just 0.46%. 

On a £10,000 investment that’s just £46 a year — £3.83 a month.

As we said: pay less and look forward to keeping more of your investment returns. 

Important information

Capital at risk. The value of your portfolio with InvestEngine can go down as well as up and you may get back less than you invest. Eligibility to invest in an ISA depends on personal circumstances. Cost example figures are illustrative.

This communication is provided for general information only and should not be construed as advice. If in doubt you may wish to consult a professional adviser for guidance. 

1Average annual ETF charges of 0.17% plus market spread costs of 0.04% a year.    

Leave a Reply

Your email address will not be published.