Costs matter in investing. The more you pay to invest in a fund, the less money you have to meet your savings goal, and as time goes by, an extra few tenths of a percent here or there can really compound up. Over decades, we're talking thousands or tens of thousands of pounds of a difference to your pension pot, potentially. So keeping your costs as low as possible is a good idea.
Fund managers publish their ongoing charges figure (OCF) previously known as the total expense ratio (TER) to give an indication of the cost of investing in their funds. This figure is supposed to tell you the annual costs of an investment fund as a percentage of its average asset value over a single year in other words, how much of your investment is eaten away by running costs. So if a fund has an OCF of 0.5%, then for every £1,000 you invest, £50 goes on costs.
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