The Cost of Investing

If you are a fairly new investor, or considering becoming an investor you already know the myriad of options available to you. There are full-service and discount brokers to choose from, online and brick and mortar companies everywhere. There are charges involved from buying fees, selling fees, commissions, and inactivity fees to be aware of when choosing a broker. If you are brand new to investing and curious about the costs involved, we will try and break it down for you here.

First of all, do you even need a broker? It is not required, however having a broker online or off, will save you plenty of time and money! They handle your transactions and do a lot of the research for you.

The second most common question is “are all brokers the same?” The simple answer here is, absolutely NOT. There are full service brokers and discount brokers. Some brokers offer a more limited selection of stocks than others. The fees associated with investing also vary dramatically from one broker to the next.

Let’s get into the actual cost involved with investing. Choosing the right broker will depend upon how much money you plan to invest and the number of trades you plan to make each month. If you don’t have a lot of money to invest then you should choose a broker that has no margin limit, however, be prepared to pay higher fees for this service. If you have a lot of money to invest, look for a broker with smaller fees.

Some of the fees to be aware of include prices for buying and selling stock (transaction fees), withdrawal fees, and consultation fees, amongst many others. Make sure you read your agreement thoroughly before joining any particular broker, or brokerage firm. All fees are listed but you need to look for them in the agreements!

If you plan to buy stock and let them ride, be patient and consider your purchase a long term investment then you would be less concerned about buying and selling fees, but more concerned about maintenance fees that are charged monthly. Conversely, if you will be trading daily, (buying and selling) the transaction fees will be of concern to you. Generally speaking monthly fees can be lowered or eliminated completely if you meet the required number of transactions each month.

Investing does come with a cost. You will need to do your research, decide how you want to invest, how often, how much money and if you want to buy and sell daily, or a few times a month. You will need to know all of this prior to looking for a broker. This will determine which broker is best suited for your needs. Remember that full service broker’s fees are much higher than discount brokers fees. Full service brokers do the research and investing for you, while discount brokers allow you to pick and choose where your money goes.

Decide how you want to invest and using that information you can find a broker that will not end up costing you more than you can afford! You don’t want the money you have to be investing to be eaten up by fees, so choose wisely!