Investment Charges are certainly important because they have a direct impact on the real return you get on your investments.

but they are not everything!

While it is true that excessive Investment charges are important because they act as a drag on your investment returns, you have to take other factors into account as well. It is unlikely that the investors following Warren Buffett would complain of paying higher charges, because he has continually outperformed for decades. Quality performance is worth paying for.

Suppose your investment returns 8% in one year, but you are charged 2%, the net return will be 6%. That is unquestionably a significant impact.

The real issue that investors should not lose sight of is that the overall growth of the investments is more important. For example, say you bought a lower-cost investment, costing 1% per year. This would mean a smaller drag on your investment returns, and in theory should mean a greater net return. To use the example above, if the return was 8% before charges, the net return would be 7% after charges. On that basis it makes sense to go with the lower charges.

But having a lower-cost investment does not necessarily mean you will achieve the same, or higher, net returns. If the higher-cost investment achieved 10% return before charges, but charged you 2%, you would end up with 8% net return, whereas the lower-cost investment achieving 8% return before charges as above, but charging 1%, would result in a net return of 7%. The more expensive option is actually the better in this case.

Beware the one-dimensional perspective of just comparing charges on investments, as it rarely provides you with a completely fair appraisal of value. Quality managers, or portfolio's, or unique investment funds will often attract premium pricing for very good reason. And low cost funds are often low cost because they are not seeking exceptional performance.

Keep investment charges in perspective. They matter, but that are not everything.