What do the fees actually cost me?Start here

A fee is a percentage of everything you own, taken every year, for as long as you own it. Over decades that is not a rounding error.

The headline number is not the whole cost, and the whole cost is not a one-off. Both of those are worth an hour of anybody's attention, once, ever.

How much difference does 1% really make?

Put in 10,000 and leave it for 30 years, in a market returning 7% a year. At no cost you end with about 76,000. At a 1% annual fee you end with about 57,000. The fee took roughly 19,000 — about a quarter of everything the money made.

That is not because 1% is large. It is because it is charged on the whole balance, every year, including on the gains that earlier fees already reduced. The fee compounds against you at the same time your money compounds for you.

The costs and fees page has the calculator. Put in your own fee and your own horizon; it takes a minute and the number tends to stay with people.

Which fees are there, apart from the one advertised?

• The ongoing charge (TER, OCF). What the fund takes annually. Printed on the front page, deducted from the price, never billed.
• Transaction costs inside the fund. What it pays to trade. Not in the TER. Disclosed separately, often further back in the document.
• Your platform's fee. Either a percentage of your holdings or a flat charge. Small percentages on large balances add up faster than people expect.
• Dealing costs. Commission plus the spread between buying and selling price, paid every time you trade.
• Tax drag. Not a fee, but it comes out of the same return.

An entry charge, where one still exists, is painful once and then over. The annual ones are the ones that matter, because they are charged again next year.

Is an expensive fund worth it if it performs better?

It would be, if you could tell in advance which one that is. The difficulty is that the fee is certain and known today, and the outperformance is uncertain and known only afterwards. Those are not comparable quantities.

What the evidence consistently shows is narrower and more useful: cost is one of the few things measurable in advance that reliably predicts future returns, in the obvious direction. That is not an argument that active management cannot work. It is an argument that you are paying a certain amount for an uncertain thing, and it is worth knowing the size of the certain part. Active versus passive goes through the actual numbers.

Where do I look these up?

For a fund, the KID or KIID — two or three pages, legally required, with a costs table that is standardised so funds can be compared. The KID playbook walks through where the numbers hide. For a platform, the fee schedule, which is usually a separate document from the one you were shown when you signed up.

What is the single best move?

Add up what you pay in total, as one percentage, once. Most people have never done it, and most people who do it are surprised — not because they were cheated, but because five small numbers in five documents do not feel like one large number until you write them on the same line.