That is a question that depends upon a number of factors, one of which is cost.

Some investors may overlook costs because they can be confusing or hard to identify, but they don't have to be. Below, we have summarised the main costs you need to consider.

Investing in a managed fund

Different managed funds charge different fees, but there are generally both ongoing management fees and administration charges that will need to be paid.

Small differences in the amount of fees you pay can have a large impact on your returns over time.

That’s why it’s important to read the Product Disclosure Statement for details on fees and charges before investing in a fund.

Some of the common fees you should examine before you invest.

  • Establishment fee – this is a fee to open your investment. This is often between 0% and 5% of the amount you invest.

  • Contribution fee – the fee on each extra sum you put into your investment. This can range between between 0% to 5%.

  • Management fees and costs – the fees and costs for managing your investment. It is typically between 0.5% and 2.5% per year. This is deducted from your account balance.

  • Performance fee – an extra fee a fund manager may charge if the investment return exceeds a target return.

  • Adviser service fee – ongoing fee paid to your financial adviser if they arranged the investment. It's typically between 1% to 2% per year.

The fund may also charge you fees for withdrawals, to change investment options or exit the investment.

In a managed fund, these fees are typically deducted from your account balance, so you may not notice them but they will reduce your return.

Cost for Investing Directly in Shares


Whenever you buy or sell shares you will pay a brokerage fee to your stockbroker. The size of the fee will depend upon which broker you use and what type of service they provide.

Online brokers can charge as little as $10 for trades up to $1000, but full service brokers who provide research and customer service will charge more.

The more money you invest, the smaller the brokerage fee will be as a percentage of your investment.

When you sell the shares, you will incur a similar brokerage fee.

Frequent trading will significantly increase your costs as you pay a brokerage fee with each new transaction.


Investing in multiple shares, and trading actively, will make your tax affairs more complicated as you will need to keep track of your costs and earnings, including any capital gains, for tax reasons.

This means you will likely have more complex tax affairs come tax time, and will need to pay a higher fee to your accountant.

If you acquire a really diversified portfolio, you may also need to buy specialised share management software.

Managed RMBS fund

Some funds give investors access to asset classes they could not realistically invest in themselves, so there is no realistic comparison to direct investment.

One such fund is the Firstmac High Livez fund, which gives access to Residential Mortgage-backed Securities (RMBS), which are normally the exclusive preserve of institutional investors.

RMBS are bonds that are secured against a pool of prime Australian residential mortgages and receive interest payments from those mortgages.

High Livez aims to provide regular monthly income, while being less volatile than the stock market.

High Livez charges management fees and costs, but has no establishment fee, no contribution fee, no withdrawal fee and no exit fee.

As will all investments, it is important to seek independent financial advice before making any decision.

For more information about High Livez, see here.