We hear a lot about charges on investments, but rarely get a breakdown of what that actually means.
Various costs apply when we’re buying or selling, and there are also ongoing fees that the investment manager will take as the price of looking after our money. Knowing how much you are paying is important, as it will affect the fund’s performance, particularly over the long term.
The first fees are handed over when you buy an OEIC, stocks and shares ISA, or investment trust. You will also be charged a dealing fee if you invest in the stock market through a broker.
Among the additional amounts are investment management charges, which are deducted from your investment’s value so as to cover the costs of researching and selecting investments for the fund.
Then there are administration charges. These cover matters such as keeping an up-to-date list of the investments held in the fund and daily pricing that makes it possible to calculate the current value.
There may also be a fee if you have bought the investment using a platform that lists a range of investment funds offered by various fund managers. When the charges are deducted, there is less money invested and, if the fees are high, this can have an impact on performance.
Ensuring you don’t overpay is an important aspect of the investment process. If you need independent financial advice in Chester that will help to establish the impact of fees, give us a call.