Fees! fees!! fees!!!, fees are a percentage that vendors, or platform owners charge for doing a particular transaction either buying or selling. Every person who invests knows that fees are a part of the investing and trading world. In fact, when brokerage companies and markets want to get people to trade and invest more, they use the word “zero fees” or “x% deducted from fees”.
The truth is, fees are funds that most firms use to pay for logistics as well as keep for rainy days or days of emergency but at the same time, there are a lot of fees that not necessary and are costing the users a fortune. Imagine a trader get a 6% return in trade and has to pay about 3% in fees all through the trade, then the trade has a negative return and the fees are leaving the trader the trader with only 3%. Some fees are fixed and some fees are variable as they change depending on the transactions being carried out. Fixed fees are fees that do not change no matter the quantity of trade while variable fees are fees that changes depending on the transaction per percentage.
Investors do have preferences with fees, while some like fixed fees, other like variable fees. Investors who invest large amount of funds in some cases like fixed fees if the fees are smaller compared to the funds invested. An investor who wants to invest $1 million will be willing to pay a $5 fee over a million compared to an investor who wants to invest little who would lose majority of their funds in fees. While variable fees are fees that are determined by the percentage of funds.
There are fees like broker’s fee, transaction fee, recurring fee, deposit fees, withdrawal fees, Management Expense Ratio (MER), Brokerage fees, Load fee, and so on. In as much as fees cannot be overlooked, some fee can be boycotted. It is important that investors and traders understand this types of fees and do their due diligent to minimize fees. Pay for fees of values and neglect fees that are not valuable and are a rip off. The best way to identify fees that are of no value is by checking through the brokerage and ask for the list of fees and their importance, then you can ask for a removal of fees you do not want to subscribe to.