WHERE YOU BUY YOUR FUND MATTERS TOO
While fund costs are falling, the benefits can be wiped out if you use the wrong broker to trade your funds or shares.
Your choice of “fund shop” is key, as their costs vary. Picking the wrong one could cost you thousands. But selecting the right one is not easy.
The amount you pay depends on your level of assets, the amount you trade and what you are buying.
a wealth of
information on the best fund shop for your Isa or self-invested personal pension (Sipp).
Our figures, compiled by Lang Cat, a consultancy, assume that investors have 80pc of their money in funds and 20pc in shares and that investors make four fund switches and two share trades per year.
The analysis shows that for an individual with £20,000 invested, the cheapest options are Close Brothers, Fidelity Personal Investing or TD Direct Investing, which cost 0.34pc, 0.35pc and 0.36pc a year respectively, on top of the funds’ charges.
The most expensive at this level are the Share Centre at 1.14pc and iWeb at 1.25pc. The difference between the priciest and cheapest is £182 a year.
For someone with £500,000 to invest, the cheapest option is Interactive Investor, which charges just 0.02pc, equivalent to £100 a year. This is also the cheapest platform for those with £100,000 to invest.
The most expensive platform for those with £100,000 or £500,000 is Hargreaves Lansdown, which charges 0.32pc, or more than £1,500 on £500,000.
Holly Mackay of Boring Money, a finance website, said: “If you have up to about £70,000, a percentage fee will usually be cheaper. Once you start getting into the £100,000-plus league, fixed fees will typically be cheaper.”
Price is not the only consideration for investors, however. Levels of customer service vary between fund shops, as do the amount of information they provide and the usability of their systems.
Investors also need to be aware of the different charges for different investments.
Typically buying funds on platforms costs one amount while buying investment trusts, which are shares listed on the stock market, costs a different amount.
heard from readers who have switched from investing in unit trusts into investment trusts in order to slash their costs.
Customers of the more expensive fund shops can switch, although this often costs money, or they can try haggling with their existing firm.