What are the costs of setting up your investment programme?

Just as you need to know the after-tax return for you personally, you need to know the after-all-charges return to build a clear idea of what you stand to gain through a particular Savings or investment medium. Some products are very simple. For example, when you save with a building society, you are quoted a particular rate of interest. The rate has been pitched at a level which (taking other factors into account) is expected to cover the society's costs. What you are quoted is what you get net of charges

Watch out for interest penalties if you cash in term or notice accounts. Most packaged products (Life Insurance, unit trusts, Pension Schemes) are more complex, with a variety of different charges, management fees, upfront charges, surrender penalties, switching fees, and so on. Trying to understand the impact of all these charges can be a nightmare. Nonetheless life insurance and pension providers have had to provide illustrations of the possible return from their products, netting out the impact of their own charges on the return you get.

 

Trying to understand the impact of all these charges can be a nightmare. Nonetheless life insurance and pension providers have had to provide illustrations of the possible return from their products, netting out the impact of their own charges on the return you get.

A third group of investments are those that run up dealing or transaction costs when you buy and sell them. These include most shares, gilts and corporate bonds. When assessing the return you might get, you should deduct what you will pay in stockbroker's commission, stamp duty, and so on.

 

UK Investments - Financial, Property & Other Investments - 1998-2008

Investments Newsletter

Investments Newsletter