Understanding investment and broker fees can protect investments and increase returns. Investment expenses have a big impact on financial returns, especially over a long period of time.
Common Investment Fees
Common investment and brokerage fees are charged on a variety of different accounts including brokerage accounts, mutual funds, stock trades, and retirement accounts. Management advisory fees and sales loads are also charged on many types of accounts. Investment and brokerage fees can have a big impact on returns, so it's important to understand the fees being charged on all investment accounts.
Most fees are paid annually, and are automatically deducted from an account. If investors don't regularly examine statements, losses to fees may come as a big surprise. An investment fraud attorney often sees clients who have paid thousands of dollars in fees on various accounts. Annual investment fees can range from .25% up to 2% of the account value. Over a 30 year period, an annual fee of 1% can cost an investor almost $100,000.
Avoiding Investment Fees
When working with a broker, choosing an online broker that doesn't charge annual fees can increase returns. Annual brokerage fees can range from $50 to $75 per year, but brokers may charge different fees for different types of accounts. Some brokers or advisors charge a percentage of the total amount invested. When stocks are purchased or sold, discount brokerage houses may charge as little as $5 per trade, while full-service brokers may charge up to $200 per trade. For investors who trade infrequently, it's best to set up an account that doesn't assess inactivity fees.
Loaded mutual funds charge fees to the investor that compensate the broker who handles the mutual fund activity.
Investors can prevent investment fraud often seen by an investment fraud attorney and protect returns by understanding account fees and other important account information. Investment and broker fees can reduce returns.