Online brokers are certainly quick to point out trade commissions on the homepage of their website. Some even create a comparison chart to let you know that they are offering better prices than their competitors are. However, the investing fees are not the only cost you as a trader online have to incur.
There are a number of other fees that you are charged with. If you are using a slow internet connection better invest first into a reliable internet connection first. Here are some tips about the investing fee you must know. Some you are aware of and some you are not.
Understanding The Investing Fees
There is always a cost of doing business. And investing is no different. Even when you are investing your income in 401(K), if you are not paying attention, then you could be wasting a big chunk of your funds into investment fees. That is exactly why you must know about all types of investing fees.
But all investment fee isn’t bad. A portion of this fee helps protect your investment and makes sure it is managed well. All you have to do is make sure you are not letting the excessive fee cut your return.
The must-read investing books as well as experts will tell that a trader must never invest in anything he doesn’t understand. And this doesn’t just mean you must know everything about the stock but about the investment fee as well. You must know what you are paying for and how much it costs.
Types Of Online Investing Fees
Let’s cut to the chase and find out which investing fees you don’t know you are being charged with:
1. Account Inactivity Fee
Yes, unfortunately, you are charged with an inactivity fee, too. If you have an account with an online brokerage and you haven’t used it in a while, you will end up paying its price. There are some brokerages that have a limited amount of time a trader can go without making the trade. If you don’t trade within the specified time period, then you will end up paying a fee which can be as high as $200. In case you have one or two trading accounts that you haven’t used recently, make sure you keep them active otherwise, get ready to pay the inactivity fee.
2. Paper Statement Fees
There are certain brokerage platforms that send you monthly paper statements mentioning the trades you have made in detail. These paper statements can cost you up to $48 each year. So you better opt for electronic statements. If you think you need to have a record of your trade and investments, then you might be better off with paper statements. Whatever the case, keep in mind that it comes with a price.
3. Transfer Fee
Whenever you part ways with a broker, they charge a fee. You might have to pay $50 or higher. Brokers charge you with this fee because they have to cover the cost of shipping your stock holdings and transferring cash to a new broker. But you can avoid this expense by selling the stocks in your old account and writing a check to the new broker.
4. Account Closure Fees
Closing your trading account has a fee, too. Brokerages charge up to $75 for that. It is impossible to avoid this fee. However, if you do research before signing up with a broker, you can protect yourself from spending extra money on such fees.
Other Fees Associated With Brokerage Accounts
Since we are talking about online investing fees, here are a bunch of other fees that you will come across:
- Brokerage Fees: It is a fee charged by the broker with which you have opened an investment account. It includes the annual fees of maintaining your brokerage account, investing data, fees for accessing trading platforms, inactivity fees, etc. You can avoid this fee if you choose the right broker.
- Stock Trading Fee: It is the fee charged by the brokerage when you buy or sell your stocks.
- Mutual Fund Transaction Fee: It is the fee charged when you buy or sell mutual funds.
- Sales Load: It is the charges you pay to the broker or salesperson who sold your mutual funds.
- Advisory Fee: It is a fee paid by an investor to their financial advisor.
- 401(k) Fee: It is an administrative fee you pay for maintaining your plan.
No doubt hidden investment fees can increase the price of the product/service. You can’t avoid all investing fees but you can definitely reduce them by doing some homework and picking the right brokerage platform for CFD stock trading. Some of them may be charging an outrageous amount you aren’t even aware of.