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Costs Associated With Stocks

“By focusing on costs and shaving them where you can, you’ll dramatically improve your return, no matter what the market does.”

- Ilyce R. Glink, author of
100 Questions You Should Ask About Your Personal Finances

 

Stocks, unlike mutual funds, are inherently efficient when it comes to costs because you’re not paying a money manager to conduct the day-to-day research, analysis, and buy-and-sell decisions. You, of course, are doing that yourself.

So the only real cost associated with stocks is trading expenses. The more services offered by the brokerage handling your stock trades, the higher the cost of each trade. Hence, the more responsibility you take on yourself, the more money you’ll save.

A full service broker will charge you the most, anywhere from $25 to $125 a trade, or even a percentage of the amount being invested. Discount brokers such as Charles Schwab and Jack White have created a secondary market through competition, where per trade fees range from $15 to $30.

Both full-service and discounted brokers may offer bigger discounts to large volume, active traders and to clients who maintain a specified minimum in their accounts.

The cheapest route is to open an online account and make trades through the electronic trading system, where you can buy stocks for as little as $8 per trade.

 What is a Stock?

 Types of Stock

 

 Stock Terminology

 

 How to Research Stocks

 

 When to Buy and Sell

 

 Costs Associated with Stocks

 

 Tax Issues

 

 

 

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