Highstreet bank fund, custom ETF or Nutmeg?
It's a good question, I am amazed how few people ask this. To summarise: is it really worth paying substantial fees to arrange a generic investment though your high street bank? Almost certainly not. However, one caveat: You didn't mention what kind of fund(s) you want to invest in, or for how long. You also mention an “advice fee”. Are you actually getting financial advice – i.e. a personal recommendation relating to one or more specific investments, based on the investments' suitability for your circumstances – and are you content with the quality of that advice? If you are, it may be worth it. If they've advised you to choose this fund that has the potential to achieve your desired returns while matching the amount of risk you are willing to take, then the advice could be worth paying for. It entirely depends how much guidance you need. Or are you choosing your own fund anyway? It sounds to me like you have done some research on your own, you believe the building society adviser is “trying to sell” a fund and you aren't entirely convinced by their recommendation. If you are happy making your own investment decisions and are merely looking for a place to execute that trade, the deal you have described via your bank would almost certainly be poor value – and you're looking in the right places for an alternative. ~ ~ ~ On to the active-vs-passive fund debate: That AMC of 1.43% you mention would not be unreasonable for an actively managed fund that you strongly feel will outperform the market. However, you also mention ETFs (a passive type of fund) and believe that after charges they might offer at least as good net performance as many actively managed funds. Good point – although please note that many comparisons of this nature compare passives to all actively managed funds (the good and bad, including e.g. poorly managed life company funds). A better comparison would be to compare the fund managers you're considering vs. the benchmark – although obviously this is past performance and won't necessarily be repeated. At the crux of the matter is cost, of course. So if you're looking for low-cost funds, the cost of the platform is also significant. Therefore if you are comfortable going with a passive investment strategy, let's look at how much that might cost you on the platform you mentioned, Hargreaves Lansdown. Two of the most popular FTSE All-Share tracker funds among Hargreaves Lansdown clients are: (You'll notice they have slightly different performance btw. That's a funny thing with trackers. They all aim to track but have a slightly different way of trading to achieve it.) To hold either of these funds in a Hargreaves Lansdown account you'll also pay the 0.45% platform charge (this percentage tapers off for portolio values higher than £250,000 if you get that far). So in total to track the FTSE All Share with these funds through an HL account you would be paying: This gives you an indication of how much less you could pay to run a DIY portfolio based on passive funds. NB. Both the above are a 100% equities allocation with a large UK companies weighting, so won't suit a lower risk approach. You'll also end up invested indiscriminately in eg. mining, tobacco, oil companies, whoever's in the index – perhaps you'd prefer to be more selective. If you feel you need financial advice (with Nationwide) or portfolio management (with Nutmeg) you have to judge whether these services are worth the added charges. It sounds like you're not convinced! In which case, all the best with a low-cost passive funds strategy. And it's only as cheap as 1.78% if you stay with them 10 years! They'd love that. You can kind of tell they really want to lock you in for over 4 years. I also think it's daylight robbery, but as a self execution investor I tend to have to talk myself out of that belief by default to be fair. One can wonder too, why are there even 2 fixed (percentage wise) fees? They are desperate not to have one number that is too big sounding, either the advisor fee is a rip off because they have to do all the same analysis regardless, or you could take the view that it's the only valid fee as you're paying for a slice of something, where as the other fee is what? A share of the fixed costs? Well, isn't advising as essential as anything else? I actually think Nutmeg is OK, I've not used them or dealt with them in any way but they are, to a greater or lesser degree, what I've wished for to recommend to friends who don't want to DIY, which is a cheaper next generation online investment facility, and their fees drop significantly over 100K. Going by their claimed past performance and fee structure, whilst I'd like them to be cheaper, I personally think they are not a bad choice in the market.
"I use TIAA-Cref for my 403(b) and Fidelity for my solo 401(k) and IRAs.  I have previously used Vanguard and have also used other discount brokers for my IRA. All of these companies will charge you nothing for an IRA, so there's really no point in comparing cost in that respect.  They are all the ""cheapest"" in this respect. Each one will allow you to purchase their mutual funds and those of their partners for free.  They will charge you some kind of fee to invest in mutual funds of their competitors (like $35 or something).  So the real question is this: which of these institutions offers the best mutual and index funds.  While they are not the worst out there, you will find that TIAA-Cref are dominated by both Vanguard and Fidelity.  The latter two offer far more and larger funds and their funds will always have lower expense ratios than their TIAA-Cref equivalent.  If I could take my money out of TIAA-Cref and put it in Fidelity, I'd do so right now. BTW, you may or may not want to buy individual stocks or ETFs in your account.  Vanguard will let you trade their ETFs for free, and they have lots.  For other ETFs and stocks you will pay $7 or so (depends on your account size).  Fidelity will give you free trades in the many iShares ETFs and charge you $5 for other trades.  TIAA-Cref will not give you any free ETFs and will charge you $8 per trade. Each of these will give you investment advice for free, but that's about what it's worth as well.  The quality of the advice will depend on who picks up the phone, not which institution you use.  I would not make a decision based on this." You can invest in a couple of Sharia-conform ETFs which are available in Germany and issued by Deutsche Bank (and other financial institutions).  For instance, have a look at these ETFs: DB Sharia ETFs In addition, Kuveyt Turk Bank aims to become Germany's first Islamic bank offering Sharia conform investments (Reuters). is There Anyway I can Avoid losing 6-10% per Trade. As My Current Investment House Has Charged & will Be taking 5% hit quarterly If Left Untouched  Stop trading penny stocks.  Take your investment elsewhere and put it in a low-fee index fund ETF.  You'll probably get a better return on your money. Thanks very much.  12b1 is a form that explains how a fund uses that .25-1% fee, right? So that's part of the puzzle im getting at.  I'm not necessarily trying to understand my net fees, but more who pays who and based off of what.   For a quick example, betterment bought me a bunch of vanguard ETFs. That's cool. But vanguard underperformed vs their blackrock and ssga etfs. I get that vanguard has lower fees, but the return was less even taking those into account.  I'm wondering, first what sort of kickback betterment got for buying those funds, inclusive of wholesale deals, education fees etc.  I'm also wondering how this food chain goes up and down the sponsor, manager tree.  I'm sure it's more than just splitting up that 1% I'm honestly not well versed on healthcare ETFs. I have seen a few mentioned here and there on various threads around /r/investing and /r/wallstreetbets. My pro-Vanguard bias would lead me to looking most closely at VHT, but there seem to be [many other great looking picks](http://etfdb.com/type/sector/healthcare/) out there such as IBB, XLV, and IHI, among others. Right now I am generally concerned about valuations in technology and perhaps simply in general, but we'll see what happens.  As I craft my goals for the near and long term, I would favor the defense industry ($ITA), technology (broad definition -- $VGT, $V, $AAPL, $BABA, various video games companies short term), healthcare (above), some specific international exposure (such as $EWGS), and boring stuff ($VOO, $VTI). UNG    United States Natural Gas Fund  Natural Gas USO    United States Oil Fund  West Texas Intermediate Crude Oil UGA    United States Gasoline Fund     Gasoline DBO    PowerShares DB Oil Fund     West Texas Intermediate Crude Oil UHN    United States Heating Oil Fund  Heating Oil I believe these are as close as you'd get. I'd avoid the double return flavors as they do not track well at all.  Update - I understand James' issue. An unmanaged single commodity ETF (for which it's impractical to take delivery and store) is always going to lag the spot price rise over time.   And therefore, the claims of the ETF issuer aside, these products will almost certain fail over time. As shown above, When my underlying asset rises 50%, and I see 24% return, I'm not happy. Gold doesn't have this effect as the ETF GLD just buys gold, you can't really do that with oil. They have ETFs for most of what you listed above.  Except the deep-fried candy bars.  You know that's just a distributed candy bar that is THEN fried right?  They have a few religious ETFs as well as some socially responsible ones.   There is no reason to make one based on a single person's preference though - ETFs make their money on fees.  For that they need VOLUME.   Move Volume = More Money  Also, there are over 1,411 ETF's in the US as of 2014.  That means there are a lot of options already. You could always create your own if you are a great salesperson though. Source "Save the effort.  For personal finance purpose, just use the simple tools.  For example, if you like P&G very much but you want to diversify with ETF, use: http://etfdb.com/stock/PG/ https://www.etfchannel.com/finder/?a=etfsholding&symbol=PG Pick a ETF with highest weighting. Replace ""PG"" in the link with other tickers." I'm not familiar with QQQ, but I'm guessing this is something like IShares Ftse 100 (see description here) I just finished a high frequency trading project. Individuals can do it, but you need a lot of capital. You can get a managed server in Times Square for $1500/month, giving you access to 90% of the US exchanges that matter, their data farms are within 3 milliseconds of distance (latency). You can also get more servers in the same building as the exchanges, if you know where to look ;) thats all I can divulge good luck "I'm trying to understand how an ETF manager optimized it's own revenue.  Here's an example that I'm trying to figure out.  ETF firm has an agreement with GS for blocks of IBM. They have agreed on daily VWAP + 1% for execution price.  Further, there is a commission schedule for 5 mils with GS. Come month end, ETF firm has to do a monthly rebalance. As such must buy 100,000 shares at IBM which goes for about $100 The commission for the trade is 100,000 * 5 mils = $500 in commission for that trade. I assume all of this is covered in the expense ratio. Such that if VWAP for the day was 100, then each share got executed to the ETF at 101 (VWAP+ %1) + .0005 (5 mils per share) = for a resultant 101.0005 cost basis  The ETF then turns around and takes out (let's say) 1% as the expense ratio ($1.01005 per share)  I think everything so far is pretty straight forward. Let me know if I missed something to this point.  Now, this is what I'm trying to get my head around. ETF firm has a revenue sharing agreement as well as other ""relations"" with GS. One of which is 50% back on commissions as soft dollars. On top of that GS has a program where if you do a set amount of ""VWAP +"" trades you are eligible for their corporate well-being programs and other ""sponsorship"" of ETF's interests including  helping to pay for marketing, rent, computers, etc.  Does that happen? Do these disclosures exist somewhere?" Where are you planning on buying this ETF?  I'm guessing it's directly through Vanguard?  If so, that's likely your first reason - the majority of brokerage accounts charge a commission per trade for ETFs (and equities) but not for mutual funds.   Another reason is that people who work in the financial industry (brokerages, mutual fund companies, etc) have to request permission for every trade before placing an order.  This applies to equities and ETFs but does not apply to mutual funds.  It's common for a request to be denied (if the brokerage has inside information due to other business lines they'll block trading, if a mutual fund company is trading the same security they'll block trading, etc) without an explanation.  This can happen for months.  For these folks it's typically easier to use mutual funds. So, if someone can open an account with Vanguard and doesn't work in the financial industry then I agree with your premise.  The Vanguard Admiral shares have a much lower expense, typically very close to their ETFs. Source:  worked for a brokerage and mutual fund company I know of no way to answer your question without 'spamming' a particular investment.  First off, if you are a USA citizen, max out your 401-K. Whatever your employer matches will be an immediate boost to your investment.  Secondly, you want your our gains to be tax deferred. A 401-K is tax deferred as well as a traditional IRA.  Thirdly, you probably want the safety of diversification. You achieve this by buying an ETF (or mutual fund) that then buys individual stocks.  Now for the recommendation that may be called spamming by others : As REITs pass the tax liability on to you, and as an IRA is tax deferred, you can get stellar returns by buying a mREIT ETF.  To get you started here are five: mREITs  Lastly, avoid commissions by having your dividends automatically reinvested by using that feature at Scottrade. You will have to pay commissions on new purchases but your purchases from your dividend Reinvestment will be commission free.  Edit: Taking my own advice I just entered orders to liquidate some positions so I would have the $ on hand to buy into MORL and get some of that sweet 29% dividend return. Bond MF/ETF comes in many flavour, one way to look at them is corporate, govt. (gilt/sovreign), money market (short term, overnight lending etc.), govt. backed bonds. The ETF/MFs that invest money in these are also different types. One way to evaluate an ETF/MF is to see where they invest your money. Corporate debts are by the highest coupon paying bonds, however, the chance of default is also greater, if you wish to invest in these, it is preferable to look at the ETF/MF's debt portfolio financial ratings (Moodies etc.). Govt. bonds are more stable and unless the govt. defaults (which happens more often than we would like to think), here also look for higher rating bonds portfolio that the fund/scheme carries. The govt. backed bonds are somewhat similar to sovreign bonds, however, these are issuesd by institutions which are backed by govt. (e.g. national railways, municipal bodies etc.), any fund/scheme that invests in these bonds could also be considered and similarly measured. The last are the short term money market related, which provides the least return but are very liquid. It is very difficult to answer how you should invest large sum on ETF/MFs that are bond oriented. However, from any investment perspective, it is better to spread your money. If I take your hypthetical case of 1M$, I would divide it into 100K$ pieces and invest in 10 different ETF/MF schemes of different flavour: Hope this helps. Perfect competition would not be the outcome you want from this model, nor does it imply what you posit. It implies that there will be infinitely many firms, with free entry/exit, making zero profits. Bonds would then become a reason for exit if you had heterogeneous firms (but in perfect competition this is unlikely). In fact in equilibrium no would (probably) issue bonds. What it seems like you want is some sort of structured oligopoly, or a regulated cartel separated into regions. This might generate the bond market you have in mind, but it still does not take into account the relative risk of the bonds.