Finance

Trading Shares- Fees and Charges Compared

Trading Shares

We’ve all heard of the snowball effect. You throw one down a steep snowy mountain, and it’ll grow into an avalanche. This is how debt feels like.

Small loans here and there, with seemingly negligible interest rates, and yet these small actions can have great consequences, often consuming our very lives. But, on the bright side, this can happen the other way around too. With small investments, and seemingly humble returns (and a bit of patience), small amounts of capital can grow into significant amounts of wealth.

It’s never too late or early to start, and this lesson is eventually learned by all, the easy way or the hard way. Since our investments grow relatively slowly, and humbly, we need to consider any cost that happens in the process, no matter how small. In the long run, these small “objects” cast large shadows.

This is why the fees that we are charged when trading online are a crucial element in the process of choosing who to trade and bank with, and you should always engage in a share trading charges comparison before making your ultimate choice.

Charges Explained

When trading shares, futures, directly or through the various CFDs, you will be charged a fee on the amount you trade. Depending on the type of trade, you will pay either a percentage, or a flat-rate fee. For comparison:

  • Shares- shares are often charged per transaction, regardless of the amount (within certain limits). Interactive Investor charges £7.99 per transaction, AJ Bell £9.95, and FinecoBank £2.95. Keep in mind that your trading volume and frequency will make a big difference, but even with small amounts, these fees can add up quickly.
  • Futures- traded at commissions per lot, Interactive Brokers will charge €2, Saxo Bank €4, and FinecoBank a mere €0.95.
  • CFDs Contracts for difference- for CFDs of shares the cost of trading is based on the traded sum. For example, Saxo Bank will charge 0.10%, CMC Markets 0.10%, IG 0.10%, and FinecoBank £0. Some of these charges may seem negligible, but remember, whether you are winning or losing on a particular day, you will still be charged nonetheless, and being spared a fee on a bad day can save a trader a priceless amount of frustration.
  • Exchange traded funds- in the realm of ETFs, FinecoBank charges £2.95, IG £8, Saxo Bank £6, and Interactive Brokers £6.

Keep in mind, these numbers may seem deceptively minor, and yet their impact on an investor’s bottom line has compound effects. One habit you definitely want to nurture as an investor is to avoid losing money, no matter how little is at stake.

If you are unsure of the various costs and details, you can always ask to book a demo, in which everything will be explained to you more thoroughly, and you will also be able to ask specific questions in order to clarify the process inside and out.

Making The Choice

Whichever broker you choose to trade with, the fees and charges themselves are not the only aspect to take into consideration. The reputation of the organisation is the first thing you will become aware of and care about.

Other than that, you should look into more recent customer satisfaction ratings, as well as news and developments regarding that company. Ease of use of the website, apps, platforms, and various tools provided is another important consideration.

Customer service quality and availability is also imperative, especially to the novice investor. And of course, as per our discussion above, the fees and charges that are involved will inevitably have a tremendous effect on your bottom line. After all, this is all about the money, so don’t be shy about investigating and comparing any and all costs involved in your trades and investments.

A little goes a long way, and even though it is hardly the only metric you will consider, it does say a lot about how much your broker cares about you.

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