Fees: Small Numbers Add Up
Commissions and management fees are costs that reduce the investor's outcome.
There are transaction costs and ongoing costs. Compare products by the total set of terms, not only past returns. A small percentage charged over years can affect the remaining amount. Tax rates depend on the product and the circumstances and are not uniform.
If a purchase fee of 5 ₪ is charged on a 100 ₪ transaction, that is a 5% cost of the amount even before any price change.
Check which costs exist beyond the price of the security.
Investor.gov · Impact of Fees ↗Check your understanding
A fee of 5 ₪ out of 100 ₪ is…
- 0.5%
- 5%
- 50%
Answer and explanation
5%. 5 divided by 100 is 5%.
What should you compare?
- Only yesterday's return
- Also costs and product terms
- Only the company's name
Answer and explanation
Also costs and product terms. Costs and terms affect the actual result.
Continue learning
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