Stock investing tips – Beware of brokerage fees

Investing in stock market can have its own share of ups and downs. When the market is down like in current times, it helps if you save some money using some basic stock investing tips and advice. As people say, a penny saved is a penny earned. Using these stock investment advice, you can save some money even in this recession period. These small things may not save you millions of dollars but if you see over a longer term these things help you get the maximized return from your investment.

In this article, we will talk about brokerage fees, types of brokerage fees charged by brokers and how to avoid them. The brokerage houses would often try to woo the potential customers by showing all the nice features in their online trading systems. They would tell you how easy it is to open an account, transfer assets from one broker to other, how easy it is to transact on their system and how cheap it to make a trade is. What they will not tell you in advance are the various types of brokerage fees associated with these online trading accounts.

Most companies have some underlying fee structure in all online trading systems and normal agent based system. It is important to understand what these fees and charges are before you select a brokerage house. Some brokerage houses call themselves as true ‘discount brokerage houses’ but they in effect prove to be costlier than other premium brokerage houses due to their fee structure. Some of the commonly used fees and charges which the investors should be aware of are:

Inactivity fees – As the name suggests, this fees is levied on the account if there are not enough number of trades being made from your account. Broker houses make money when you buy or sell stock. If you are not doing any trading, they have an overhead to maintain your account. That is the reason, they set these fees.

Account Maintenance Fees – This is a standard fee which you will need to pay on a yearly basis. They charge these fees to maintain your account and the features they provide you including mailing statements, maintaining historical data, providing real time stock quotes etc.

Transfer Charges – These charges are levied on you in case you want to transfer the securities to another broker. Basically, it is present to discourage you from going to another broker.

Minimum Equity Maintenance Fees – Some brokerage houses have a requirement to keep a minimum amount of equity in the form of cash or equity in their account to avoid minimum equity maintenance fees. Sometimes, these fees can be as large as $20 per quarter.

The savings done by following these stock investing tips may not be huge but they still do count for a small investor. These are even more relevant in situation like recession which is prevalent today.

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