However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money. The investing information provided on this page is for educational purposes only. NerdWallet does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks or securities. As you start learning about where and how to invest and begin researching brokerage accounts , it's easy to overlook one thing: investment and brokerage fees.
Brokerage fees are what a broker charges for various services, like subscriptions for premium research and investing data or additional trading platforms. Some even charge maintenance and inactivity fees, but generally, you can avoid paying these brokerage fees with the right broker. Finding the right broker can make a huge difference in the long-term; fees can seriously eat into your investment returns. In addition to the brokerage fees outlined above, there are various other charges you may encounter:.
Trade commission: Also called a stock trading fee, this is a brokerage fee that is charged when you buy or sell stocks. You may also pay commissions or fees for buying and selling other investments, like options or exchange-traded funds.
Expense ratio: An annual fee charged by mutual funds, index funds and exchange-traded funds, as a percentage of your investment in the fund. Sales load: A sales charge or commission on some mutual funds, paid to the broker or salesperson who sold the fund.
Management or advisory fee: Typically a percentage of assets under management, paid by an investor to a financial advisor or robo-advisor. Limited time offer. Terms apply. Over time, that difference really adds up. Total annual investment fees. Account value after 30 years. Amount lost to fees. The last column in the chart shows how much would be lost to fees over the course of 30 years.
Use the investment fee calculator below to see how investment and brokerage fees could eat into your returns over time. See NerdWallet's analysis of the best brokers. If you want to be aware of your investing fees — and trust us when we say you do — you need to know where to look. Here are the most common expenses, what you can expect to pay for each and where to find the information:. A brokerage fee is charged by the stock broker that houses your account.
Brokerage fees might include:. Brokerage fee. Typical cost. How to avoid. Note broker fees may vary depending on account type. Subscriptions are optional. Look for a broker that offers premium research and data for free. There are high-quality platforms available for free, like thinkorswim from TD Ameritrade.
Opt for emailed statements and notifications. Most brokerages charge a fee to transfer or close your account. Minimum Deposit : The minimum amount of money required to open a new online brokerage account. While most brokers do not require a minimum deposit to open a new account, some do.
Stock Trade Fee Flat : Flat fee trading means the broker charges a single rate no matter how many shares are purchased or what stock is purchased. This is the model most brokerages use. Most day trading brokers use this commission structure. Broker Assisted Trade Fee : When clients do not have access to the internet, or are trying to trade a specialty security, a broker assisted trade can be placed via phone to execute the order.
IVR trades allow clients to simply use their phone to place a trade without human assistance, whereas a broker assisted trade is placed by a licensed broker live. Mutual Fund Trade Fee : The commission charged to place a mutual fund trade depends first on the type of fund you are trading.
No Transaction Fee, or NTF, mutual funds do not carry a trade fee, for example, but an early redemption fee may be charged if you sell the fund too quickly typically within 60 to 90 days. The online broker mutual fund trade costs listed below are the standard published rates listed by the brokers and cover the majority of mutual funds including load and no-load funds.
Note that some online brokerages do not offer mutual fund trading at all. Options Trading Base Fee : When trading options online through an online brokerage, most brokers will charge a base fee per trade plus a per contract fee.
Other brokers, specifically day trading brokers, typically charge only a per contract fee and no base fee. Options Trading Per Contract Fee : Most online brokers charge a base option fee and then a commission for each individual contract.
A financial adviser differs from a stockbroker. An adviser often becomes personally involved with a client's financial situation and provides advice on many financial matters, from which mutual funds to buy to managing an estate.
Traditional commission-based stockbrokers are increasingly becoming fee-based financial advisers, according to a "Wall Street Journal" article. The article points out that advisers charge higher fees for managing equities versus bonds, which could motivate advisers to invest more heavily in stocks over bonds.
If an investor does not read the fine print on his account documents, he may wind up paying hidden fees. If an investor fails to make a trade during a specific period, she could be hit with an inactivity fee. These fees could be waived if the investor maintains an account balance above a certain threshold. Geri Terzo is a business writer with more than 15 years of experience on Wall Street.
Throughout her career, she has contributed to the two major cable business networks in segment production and chief-booking capacities and has reported for several major trade publications including "IDD Magazine," "Infrastructure Investor" and MandateWire of the "Financial Times. Terzo is a graduate of Campbell University, where she earned a Bachelor of Arts in mass communication. At the center of everything we do is a strong commitment to independent research and sharing its profitable discoveries with investors.
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