8 Hidden Investing Fees You Need to Know About


hidden investing feesI hate losing money. I don’t lay awake at night worrying about it or anything, at least not anymore, but I simply don’t like to lose money I could keep in my budget for some other purpose. I bet I’m not the only person who feels this way, because if you were to ask someone how they feel about losing money, I’m sure they would say they don’t like to lose money either.

So, why do people lose money on their investments through hidden fees? Below I’ll go over 8 hidden investing fees you need to know about so you can avoid losing money on them.

 

1 Commissions

If you buy or sell stock in your investment portfolio, you are probably paying a fee to your agent for making this transaction on your behalf. Find out what you are paying and you may be able to negotiate a lower rate of commission.

 

2 Annual Fees

Annual fees are usually charged for management and marketing. They are usually charged as a percentage of a fund’s assets. You can avoid annual fees by choosing a broker who simply doesn’t them.

 

3 Inactivity Fees

Inactivity fees may be charged to you each year or even every quarter, if you are an investor with low trade activity. Find out if your firm or broker charges fees for inactivity and try to choose one that doesn’t charge for this ridiculous fee. After all, one of the best ways to make money on your investments is to buy and hold, not trade investments on a regular basis.

 

4 Markups and Markdowns

Markup is when a broker will sell a security to you for more than the market price. They may also buy from you at a price that is lower than the market price, called a markdown. This is one way of charging a fee for this service.

 

5 Research and Data Subscriptions

Subscriptions are usually optional and you should be able to find a firm that offers research and data at no charge so you don’t have to pay for a subscription, especially if you don’t even read it when you get that huge booklet of research in the mail.

 

6 Redemption Fees

Some financial advisors charge a redemption fee for selling within a short period of time. This is purposefully intended to discourage you from short term trading.

 

7 Paper Statement Fees

These fees are most often a charge of one or two dollars per statement, but to avoid them, ask if it’s possible for you to receive your statements through email instead of traditional mail.

 

8 Account Closing Fees

Charges for closing an account can vary according to the type of account. Sometimes there are ways to get these fees reimbursed, so be sure to ask if you are thinking about moving your funds and closing your account.

Investment fees can be confusing. In fact, some firms design it that way on purpose so you don’t know what you are really paying. If you ask your broker or financial advisor how they get paid and they refuse to answer, you should probably hire a different financial advisor. But with persistence, you can find funds with low fees.

Have you fallen for any hidden investment fees?

Kayla is a personal finance blogger in her mid-20s who loves to write about money topics of all kinds.

Stay Connected with The Frugal Toad

Subscribe to our e-mail newsletter to receive updates.

, , , , , ,

One Response to 8 Hidden Investing Fees You Need to Know About

  1. The Green Swan 08/20/2016 at 11:42 am #

    Amazing how many ways you can get charged fees! I try to avoid and minimize these as much as possible. I would definitely look into how much the fee is to close an account, I’ve seen this as much as a couple hundred dollars.

Leave a Reply