Costs

Check how costs could affect your investment progress

Costs are an important consideration when investing. The greater the costs, the harder your investments have to work to deliver you a return. There are a number of different types of costs you might incur depending on how you choose to buy investment companies.

Dealing costs
BrokerageYou buy investment company shares through the stock market using a broker, perhaps online or over the telephone.Charges for these services will vary, and could be a fixed fee or a percentage of the cost of the transaction.Dealing spreadThe dealing spread is the difference between the price you can buy and sell investment company shares for. The bigger the spread, the more the price has to rise for you to make a profit.Stamp dutyIf you buy shares in UK based investment companies, you will normally have to pay 0.5% stamp duty on the value of the shares. There is normally no stamp duty on overseas-based investment companies. There is no stamp duty on the sale of shares.Wrapper scheme costsIf you hold your shares through a wrapper scheme, such as an ISA, there may be costs to provide this wrapper. These costs will be set out in the literature you will receive from the wrapper provider.Costs of running the investment companyYou can find out about all the costs incurred by an investment company in its annual accounts, including any fees paid to the portfolio manager.To help you compare investment companies more easily, the AIC also provides ‘Ongoing charges’ information for all its members on its website. This is a measure of the regular running costs of an investment company, expressed as a percentage.