What You Need to Know About Investment Fees and Charges

Black Swan Capital Europe‘s David Bellingham discusses investment fees and charges so you know what you are paying. As with everything in life when taking out a service, understanding the fees and charges associated with it is vital. In terms of investing, this knowledge has a direct impact toward your long term investment performance.

For Black Swan Capital Europe, there are two areas of particular importance when understanding investment fees and charges:

1. When Getting Advice From an Expert Firm

It is a regulatory requirement that you get your fees explained to you in advance and in writing.
Look out for commissions. In many European markets, (like the Netherlands) commissions are banned. Commissions are not always bad but do be aware of how much you might be paying indirectly.
If you are told your advisor is being paid by commission, make sure that you understand what that means. If you are still unsure, get a second opinion.

2. When You Are Managing Your Own Money

With the proliferation of self trading platforms (which can be great if you know what you are doing), many are touted as being free (or very cheap and easy). They may be cheap but they are not free
If you are told there are no fees when using a self trading platform look deeper. For example, you should look into:
- Whether you are paying transaction fees every time you trade?
- Is there a monthly account fee?
- Is there an inactivity fee?
- Are there any other costs?
If you still can’t find these, look even deeper to see if there is a “buy/sell spread”. This basically means that you should look if the price at which you buy an investment and the price you can sell it back are varied. This way, the platform may make a margin somewhere in the middle.