As with everything, investing comes with a price \u2013 you just need to figure out what it is, and whether it\u2019s worth paying for. Many fees are unavoidable, but some can be reduced or completely eradicated with some planning. Find out how to navigate the choppy waters of investment fees to help you make your money go further and compare the fees involved with each provider.<\/p>
Each broker might have slightly different names for its fees, but in general, these are the ones you\u2019ll come across:<\/p>
These fees can have different names across various platforms. Likewise they can come bundled together or be charged separately to add a bit more confusion. Let\u2019s go into a bit more detail about what each one means.<\/p>
| Name of fee<\/th> | Also known as\u2026<\/th> | What\u2019s it for?<\/th><\/tr><\/thead> |
|---|---|---|
| Custody fee<\/th> | Platform fee, annual charge<\/td> | Similar to the management fee and in some instances may be bundled with it. This covers the people responsible for holding and investing your money as well as the people managing the associated legal structure of your investments.<\/td><\/tr> |
| Commission fee<\/th> | Brokerage fee, transaction fee, entry and exit costs, front-end load or back-end load (mutual funds only)<\/td> | This fee can be charged every time you make a transaction, whether it be a buy or a sell. These fees can be either a set amount per trade or a percentage of the transaction amount. If you are buying and selling lots of small shares, these fees can add up quickly.<\/td><\/tr> |
| Management fee<\/th> | Ongoing charges, fund management fee, total expense ratio (TER), internal expenses, total annual charge (TAC), annual account fee.<\/td> | This fee is generally paid as a percentage of the managed fund and is paid to the fund\u2019s advisor for their advisory and management services. Depending on the company, this fee may also cover administrative services related to the fund as well.<\/td><\/tr> |
| Advice fee<\/th> | Ongoing advice fee, financial advisor fee<\/td> | This is the fee you will pay if you choose to seek the advice of a financial advisor to assist you with your investments and the related decision making.<\/td><\/tr><\/tbody><\/table>Know your fees<\/h3>As we\u2019ve seen, fees vary hugely between brokers. They can also vary between types<\/em> of investing. Some trusts, for example, may have the management and custodian fees bundled as they will probably be offered by the same provider.<\/p> This is an important question to ask when working out what fees you will pay. Will you buy and sell individual stocks or invest in mutual funds? Will you be dealing in lots of small stocks or fewer big ones? Will you seek the assistance of a financial advisor<\/a> or go it alone? These are all questions that will affect the type and amount of investment fees you will pay.<\/p> |