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A friend of mine suggested a plan that takes a 1% administration fee (from the assets deposited) regardless of the type of investment you make (stock, bond etc.). This sounded quite high from my experience in US/Japan.

In my experience, you usually pay a fixed administration fee per account, the transaction fee when you trade the assets, and an administration fee on your assets depending on what you buy. If you aren't buying highly exotic assets like hedge fund, "Frontier market stocks" etc. then you usually end up with something like 0.1 - 0.3%. However my friend raised the point that ISA accounts may charge more because of the fact that it is an ISA account.

What is your experience with ISA accounts? Do you think 1% on total asset is a reasonable price?

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Is he affiliated with the company charging this fee? If so, 1% is great. For him. You are correct, this is way too high. Whatever tax benefit this account provides is negated over a sufficiently long period of time. you need a different plan, and perhaps, a different friend.

I see the ISA is similar to the US Roth account. Post tax money deposited, but growth and withdrawals tax free. (Someone correct, if I mis-read this).

Consider - You deposit £10,000. 7.2% growth over 10 years and you'd have £20,000. Not quite, since 1% is taken each year, you have £18,250.

Here's what's crazy. When you realize you lost £1750 to fees, it's really 17.5% of the £10,000 your account would have grown absent those fees. In the US, our long term capital gain rate is 15%, so the fees after 10 years more than wipe out the benefit. We are not supposed to recommend investments here, but it's safe to say there are ETFs (baskets of stocks reflecting an index, but trading like an individual stock) that have fees less than .1%.

The UK tag is appreciated, but your concern regarding fees is universal.
Sorry for the long lecture, but "1%, bad."

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