Costs Really Matter – Financial Planning Week

This article has been provided by Satis Wealth Management, a sister company of Hillier Hopkins.

The late Jack Bogle - the founder of Vanguard left us all with a simple mantra that he repeated almost every time he wrote an article or gave an interview 'costs matter'. He also often used to say, 'in investing you get what you don't pay for'. And therein lies the rub. In day-to-day life, we tend to make a connection - largely correctly - that you get what you pay for. If you need a good lawyer, it will probably cost you. If you need an accountant to do your tax return, it will cost you.

Yet when it comes to investing the exact opposite applies. The more you pay in ongoing charges to invest in a fund and on all the costs associated with owning the fund over time, means on average, that there is less money left to put in your pocket. It would be easy to select a good fund if all you had to do was pick the most expensive manager, which may cost more than 1% a year. Yet