Every cent investors save on fees and other costs is one less cent they have to squeeze out of the market before retiring, buying a home or achieving any other major financial goal. Investors that use online brokers can enjoy low trading commissions and can avoid the types of exorbitant fees certain active money managers charge. Unfortunately, even investors managing their own portfolios in an online trading account may be paying more in fees than they realize. In addition to standard trading commissions, here are seven other hidden broker fees to watch out for.
- Margin Fees
Most brokerages allow customers to borrow up to 50 percent of the purchase price of a stock. While that margin may seem like a great deal, it comes at a price. Online brokers can charge margin interest of up to around 9 percent. In that scenario, stocks purchased on margin would need to deliver 9 percent annual returns just to offset margin fees. Short sellers are also subject to margin fees on all open short positions. To make matters worse, most brokers warn…
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