Beware of hidden costs!



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(Boursier.com) — Online transactions involve fees that are not always easy to identify… But the trader has every interest in finding out these additional costs. This allows him to choose the broker that best suits his profile and his investments.

1/ Brokerage

The commissions charged for the purchase and sale of securities are generally clearly displayed on the broker’s website. However, you must carefully read the details of the broker’s price conditions to avoid unpleasant surprises:
-Commission can be a percentage per order applied to a minimum amount.
-Some brokers charge a commission including buying and selling (“round up”), while others charge the two operations separately…
-The same broker can be very competitive in one market (like Euronext Paris) but expensive in others (New York, London, etc.).

2/ Spreads

The “spread” is the gap between buyers and sellers. This is a cost that is specific to the operation of the exchanges. In the case of over-the-counter (OTC) transactions, the spread may be the sole remuneration of the intermediary. The latter may show “zero commission” but a high spread. You must take this into account in your comparisons…

3/ Parental right

These rights are most often non-existent or limited as PEA and PEA-PME accounts. However, it is necessary to verify their amount. Custodial rights may also apply to certain types of products, such as UCITS.

4/ Currency costs

Buying and selling securities denominated in a currency other than your account currency will incur fees and costs in foreign currency. They are not always clearly shown in the pricing documentation. They can represent a percentage between 0.2% and 2% depending on the brokers. This rate is not neutral if you want to speculate on markets outside the Eurozone…

5/ Administration fees integrated into the courses

This particularly concerns ETFs and UCITS. These charges reduce the actual performance of the product. The only way to know the amount is to consult the DICI (Key Investor Information Document).

6/ Securities transfer fees

If you want to switch intermediaries, online brokers can charge quite high fees (around 15 euros to 30 euros per line). However, some brokers may reimburse you if you transfer your securities to them…

7/ Other examples of hidden costs

It is difficult to provide an exhaustive list of fees charged in online shopping…
Here are a few:
– Expenses paid in connection with an inheritance.
– Fees for payment of dividends on unlisted securities.
-Live quote fees at certain brokers who only issue delayed quotes for free.
-Fees for access to platforms are more extensive than the basic interface.
-Inactivity fees if you do not trade for a certain period of time. They penalize “buy and hold” traders who buy securities to hold them for the long term.

Therefore, it is important to take the time to learn about hidden costs before engaging in online trading to prevent these costs from significantly affecting the profitability of your investments!

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