So, how important are the charges in an investment product? Is it better to go with a cheap deal, or does paying more guarantee you better performance? There’s a lot of debate about charges versus performance.

Remember:

• The cheapest fund won’t necessarily give you the best return on your investment.
• High charges can make a huge difference to otherwise identical plans.

You should compare the charges of each product or fund and understand when they are charged and what you are being charged for. Higher charges could relate to fund manager expertise or you may be paying for some element of guarantee. Make sure that you also ask what effect the charges may have on performance. The person selling you the product should be able to provide an illustration that shows this.

Charges are a vital part of the picture, but a company with low charges does not guarantee that you will get a higher return – so much also depends on how well your investment performs.