The fee you cannot see

The fee printed on the fund is one of at least four. Here are all of them, and how to find the ones that are not printed anywhere.

The four fees

1. The fund charge. The one on the label. Anything from 0.05 percent to over 1 percent a year.
2. The platform charge. What the broker charges to hold the fund for you. Either a percentage of the pot or a flat amount a year. A flat fee is cheaper once the pot is above about 50,000; a percentage is cheaper below it.
3. The spread. The gap between the buying and selling price. Paid every time you trade, and invisible on a statement.
4. Trading costs inside the fund. What the fund pays to buy and sell its own holdings. Not in the headline charge. Found in the fund's costs and charges document, usually on page three.

What it adds up to

A typical "low cost" portfolio, once all four are counted, costs about 0.4 percent a year. A typical adviser-managed one costs about 1.8 percent. Over thirty years the difference is roughly a third of the final pot.

What to do

Once a year, add the four numbers up for what you hold. If the total is above half a percent, the next post to read is the one on index funds. If it is below, stop looking at it. Fees matter, and then they are fine.

Revised in July, after a reader pointed out that the platform fee comparison depended on the size of the pot. It does, and the paragraph now says so.