Fees to Consider before Your Sell Your Stock

When you sell your stock, there are a number of things that you will need to consider. One of those factors is the transaction costs that you will have to incur. When you have to pay fees on the sale of a stock, it can definitely impact the performance of your investments. When part of the profit from your sale goes to fees, this means that your investments are going to have to perform that much better to make up for it. Therefore, you need to consider the impact of these transaction costs before you close out your sale.

Brokerage Fees

The biggest fee that you are going to have to be concerned with is going to be charged by the brokerage. Your broker has to find a buyer for you when you want to sell. In order to be compensated for this service, they charge you a commission fee. The amount of this fee will vary from one broker to the next. You might be charged only a few cents, or you might be charged as much as one dollar per share. If you have several shares of a particular stock that you are selling, this could result in a substantial fee. 

SEC Fee

Another fee that you may be charged is the "SEC fee." Even though this is called the SEC fee, there is not a particular amount of money that is charged by the SEC. This is a fee that is charged by the broker in order to help compensate them for the fees that they pay to the SEC for the amount of trades that are placed. The SEC charges the exchanges a fee for the overall volume in order to make up for the costs that they incur by regulating the markets. The exchanges charge the brokers and the brokers charge their customers. Most of the time, this fee only amounts to less than $.10 per trade. This means that it is a very small fee, unless you regularly buy and sell stocks. If you are a frequent trader, you are going to find that these fees start to add up quickly.

Minimizing the Fees

As an investor, it is important that you find a way to minimize these fees. These fees can have a large impact on your trading and you want to pay as little as possible. First, you should shop around to see what the different brokers charge. Brokers all charge a different amount for these fees. Once you start working with a particular broker, you should attempt to minimize the fees. As you continue to work with a brokerage, you should be able to develop a relationship with them. Brokers tend to lower fees for good customers after a certain amount of time. 

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