How much does Dividonic cost?
Dividonic costs you nothing to use. The fees you pay belong to the managed portfolio and are set by the provider. They come out of your investment, not your bank account. Dividonic earns a flat introduction fee from the provider, which you never pay on top.
The table shows the provider's published figures on the date at the top of this page. Fees can change. If they do, we update this page the same day we find out. The provider's terms explain how much notice it gives existing customers.
| Cost | Amount |
|---|---|
| Fee charged by Dividonic | None. The provider pays us for introductions. |
What does each fee cover?
Each fee pays for a different part of the service. The annual fee covers the provider running your portfolio and account. Fund costs pay the managers of the individual funds inside it. Transaction costs come from buying and selling. Added together, they make the total yearly cost you should compare.
The annual fee
This is the provider's charge for choosing the investments, rebalancing, keeping your account and sending statements. It's a percentage of what you hold, so it grows as your portfolio grows.
Other costs
Ask the provider for its costs and charges information before you invest: it lists every cost for the managed portfolio, as a percentage and in money.
Most managed portfolios hold funds, and each fund has its own running cost. You don't see a separate bill: it's taken inside the fund and shows up as a slightly lower return. It still counts, so add it to the annual fee when you work out the total.
Transaction costs
Buying and selling investments costs money in dealing charges and the gap between buying and selling prices.
How much would I pay on $10,000 over 10 years?
On $10,000 invested for ten years, a 0.75% annual fee would take about $903 in fees, using our illustrative assumption of 4% growth a year. Because that money is no longer invested, the total gap compared with no fee is about $1,073. This is an illustration, not a forecast.
How we worked it out. We started with $10,000, added 4% growth at the end of each year, then took 0.75% of the new value as the fee. We repeated that for ten years. The second column shows what the same money would be worth with no fee at all, for comparison.
What we left out. The example ignores fund costs, transaction costs, tax, inflation, top-ups and withdrawals. Real fees are usually taken monthly or quarterly rather than once a year, which changes the figures slightly. Adding fund costs would make the total cost higher than shown.
| Year | Value with no fee | Value after 0.75% fee | Fee taken that year | Total fees paid so far |
|---|---|---|---|---|
| 1 | 10,400 | 10,322 | 78 | 78 |
| 2 | 10,816 | 10,654 | 81 | 159 |
| 3 | 11,249 | 10,997 | 83 | 242 |
| 4 | 11,699 | 11,352 | 86 | 327 |
| 5 | 12,167 | 11,717 | 89 | 416 |
| 6 | 12,653 | 12,094 | 91 | 507 |
| 7 | 13,159 | 12,484 | 94 | 602 |
| 8 | 13,686 | 12,886 | 97 | 699 |
| 9 | 14,233 | 13,301 | 101 | 800 |
| 10 | 14,802 | 13,729 | 104 | 903 |
Illustration, not a forecast. The 4% growth rate is an assumption we chose to make the maths easy to follow. It isn't a prediction or a target, and it isn't the provider's figure. Real returns vary from year to year and can be negative, in which case you could get back less than $10,000 and still pay fees. The 0.75% rate is illustrative too: check the current fee in the table above.
Why do small percentage fees matter so much?
Small percentage fees matter because they're taken every year from a growing balance, and the money taken can't grow for you afterwards. In our example, the fees themselves come to about $903, but the full gap after ten years is about $1,073. The extra $170 is lost growth.
Look at the fee column in the table. It rises each year, from $78 to $104, even though the percentage never changes. That's because it's charged on a larger pot. Over twenty or thirty years, the effect grows much larger.
Fees also don't stop in bad years. If your portfolio falls 10% in a year, you still pay the annual fee on what's left. That isn't a reason to avoid investing. It's a reason to know the total cost before you start and to compare it with what you're getting for it.
Are these fees high or low?
Whether these fees are high or low depends on what you'd do instead. A DIY platform where you pick your own funds can cost less, but you do all the work and make all the decisions. Paying a financial adviser for a full plan usually costs more. Compare total yearly costs, not headline rates.
We haven't published a comparison table of other providers, because we only check the figures for the product we cover and we don't want to print numbers we can't keep current.
One fair test: work out your total yearly cost in money, using your own expected balance. Then ask whether the time, discipline and decisions you're handing over are worth that amount to you.
What is Dividonic paid?
Dividonic is paid a flat introduction fee by the provider for each person we introduce. It's the same amount whatever you invest, and it isn't added to your costs. You don't pay us anything, now or later, and we don't receive any share of your annual fee.
We tell you this because it's a reason to read our pages critically. Our how we make money page explains the rules we follow so that this payment doesn't shape what we write.
How can I check what I'm actually paying?
You can check what you're actually paying in three places: the provider's key documents before you invest, its annual cost and charges statement once you're a customer, and the transactions list in your account. The annual statement should show your costs in money, so compare that against your expectations each year.
- Before you invest, ask the provider for its costs and charges illustration based on the amount you plan to put in.
- Once a year, read the cost summary the provider sends you. It should add up every charge in money terms.
- If a number doesn't match what you were told, ask the provider first. If you're not happy with the answer, use the complaints process on the provider's website.