Brokerage Fee Impact Calculator
See how brokerage fees and expense ratios drag on long-term investment returns.
What this calculator does
Investment charges look trivial as percentages and behave brutally as compounding. A percentage point deducted every year does not cost you one percent — it costs that amount plus everything it would have grown into across every remaining year, which over decades becomes a startling figure.
This calculator makes the effect visible. Enter a starting amount, an expected gross return, a time horizon, and any monthly contributions, then rerun with the return reduced by your total charge load. The gap between the two results is what the charges have taken.
When to use it
Run it when comparing funds with different ongoing charges figures, when weighing a percentage-based platform against a flat-fee one, and when deciding whether an adviser's ongoing charge is justified. Seeing the cost in pounds rather than basis points changes decisions that percentages never do.
It is also worth running before consolidating old pensions or ISAs. Legacy products frequently carry charges well above current market rates, and quantifying the difference over the remaining years usually settles the question of whether a transfer is worth the paperwork.
Understanding the inputs
Starting amount is your current invested balance. Annual return should be your expected gross return before charges — around 5 to 6 percent nominal is a common long-term assumption for a diversified portfolio, though it remains an assumption rather than an entitlement.
To model charges, run the calculation twice: once at the gross return and once at gross less your total annual charge. Include every layer — platform fee, fund OCF, adviser charge, and an allowance for dealing costs. Use your full remaining horizon, because charge drag grows non-linearly with time.
How is this calculated?
Net Return = Gross Return − Fees. With fees: FV_fees = P(1+r-fees)^n. Total Fee Drag = FV_no_fees − FV_fees.
A worked example
Take £50,000 invested for 25 years at a gross return of 6 percent. Left alone, it grows to £214,594. Now apply a total charge of 1.2 percent — say 0.35 percent platform and 0.85 percent fund OCF — giving a net return of 4.8 percent. The same £50,000 reaches £161,437.
The difference is £53,157, almost 25 percent of the charge-free outcome, handed over for something that sounded like barely more than one percent a year. Switching to a tracker at 0.10 percent and a capped platform fee could recover most of that gap.
Limitations and assumptions
The model assumes a constant gross return and a constant charge, neither of which holds precisely. Returns vary year to year and the sequence matters greatly once you start drawing income. Past returns do not predict future ones, and the flat-return assumption ignores volatility altogether.
It also excludes tax, which differs sharply between an ISA, a SIPP, and a general investment account, and it makes no attempt to value what a charge buys — planning, rebalancing discipline, or simply keeping you invested through a crash may be worth real money. This is not investment advice.
Common Questions
- How much do charges really cost over 25 years?
- Considerably more than the headline number implies. On £50,000 invested at 6 percent for 25 years, a 1.2 percent total charge cuts the final value from about £214,600 to roughly £161,400 — a difference of £53,000. The charge applies to the whole balance annually, including growth it has already prevented.
- What layers of charges am I actually paying?
- Usually three. The platform or custody fee, often 0.25 to 0.45 percent and sometimes capped; the fund's ongoing charges figure, from around 0.07 percent for a tracker to over 0.85 percent for an active fund; and dealing charges per trade. An adviser fee of around 0.5 to 1 percent sits on top where one is used.
- What is the ongoing charges figure?
- The OCF is the annual cost of running a fund, expressed as a percentage and deducted from returns before the price you see is published. It covers management, administration, and custody but excludes transaction costs within the fund, which are disclosed separately and can add several basis points more.
- Are percentage or flat-fee platforms better?
- It depends entirely on portfolio size. Percentage platforms charging around 0.25 percent suit smaller portfolios; flat-fee platforms charging a fixed annual amount become cheaper above roughly £75,000 to £100,000, and dramatically so above £250,000. Reviewing this as your portfolio grows is one of the easiest wins available.
- Do charges apply inside an ISA or SIPP?
- Yes. The wrapper removes tax, not costs. Platform fees, fund OCFs, and dealing charges all apply within a Stocks and Shares ISA or SIPP exactly as they do outside. Some platforms charge different rates for SIPPs, and a few levy additional fees for drawdown once you begin taking benefits.
- What is the FCA's position on value for money?
- The Consumer Duty requires firms to demonstrate their products provide fair value, and asset managers must publish annual value assessments for their funds. These have prompted fee reductions and fund closures, but the onus still sits with investors to compare what they are paying against what they are receiving.
- How much do dealing charges matter?
- More than expected for regular investors on trade-by-trade pricing. At £9.95 a trade, investing £250 monthly gives away 4 percent immediately. Most platforms offer regular investment dealing at £1.50 or free, which is why using the scheduled investment facility rather than ad hoc trades matters so much.
- Should I pay for active management?
- Only where the evidence supports it. An active fund must beat its index by more than its fee just to match a tracker, and SPIVA Europe data consistently shows the majority failing to do so over ten years. Some specialist and smaller-company areas make a stronger case than broad developed equity.
- How do I find out what I am paying in total?
- Add your platform fee, the weighted average OCF across your holdings, any adviser charge, and an estimate of annual dealing costs. Most platforms publish an illustration of charges, and MiFID II requires an annual costs and charges statement in pounds rather than percentages — that document is the one to read.