Before commission-free trading became common, buying and selling stocks used to cost quite a bit. Now, many brokers offer zero-commission trades, but that doesn’t mean investing is completely free. There are still fees that can sneak in, and it’s important to know what they are so you don’t lose money without realizing it.
Trading fees can come in a few forms. Even with zero commissions, you might pay fees for options contracts, mutual fund transactions, or account maintenance. Some platforms also charge fees for transferring money or closing your account. If you’re using a margin account, there are interest charges for borrowing money. These extra fees can add up, especially for frequent traders.
It’s also important to watch for hidden costs. Some brokers make money from something called payment for order flow, which means they route your orders to certain market makers who pay them. This might not affect you directly, but it could result in slightly worse trade prices. Always check a platform’s fee disclosure and compare it to others.
Understanding these fees helps you make better decisions. If you’re a long-term investor, high fees can eat into your gains over time. If you’re trading often, small fees can add up quickly. So, before picking a brokerage, make sure you know exactly what you’re being charged for—and how those charges fit with your investment style.
