There are very few certainties when it comes to an investing journey but, for a long time, one of those has been a brokerage fee.
This often puts investors in a bind: to invest, you need to place trades – but those trades can quietly eat into your returns. While a few dollars per trade may not seem like much at first, it can amount to tens of thousands of dollars over time.
The good news? There’s now a way to invest without paying brokerage fees.
Who charges what?
The size of a brokerage fee usually depends on the type of broker you choose.
A full-service broker (like an investment bank or stockbroker) can charge anywhere between $70 and $200 per trade. These fees are typically on top of any advice or account management charges, although they may come with the benefit of personalised investment advice.
At the other end of the scale are online brokers. These brokers don’t offer personalised advice but allow you to do the trading yourself. Some charge as little as $3 per trade and often don’t apply additional account fees. However, costs can vary depending on the provider. The total in fees you pay out will also change depending on your trading frequency.
Lastly, larger trades (say, individual trades worth more than $10,000) may attract a percentage-based brokerage fee. Both online and full-service brokers do this but, again, the cost varies on the circumstances and broker.
How much can this cost in the long run?
Let’s do the maths.
According to Canstar, the average brokerage cost in Australia in 2022 (the most recent data publicly available) for a $1,000 trade was $14.67.
For simplicity’s sake, let’s round that up to a fixed cost of $15 per month. Then let’s assume we’re investing $1,000 a month for 40 years into a low-fee broad market-based index ETF charging 0.04% p.a..
Over 40 years, brokerage fees would cost you $29,550 in lost returns over the life of the investment. That’s hardly chump change in anyone’s language.
But even if you find 40 years is a far too distant horizon, let’s look at a shorter time horizon where you are making trades more frequently.
Considering the above, let’s say that you invest $1,000 a week into this same low-fee broad market-based index ETF for five years.
If you were to keep making this investment, at the end of the five years brokerage fees alone would have cost you $3,600 – and that’s before you add in the ETF’s management fee.
In other words, it all adds up.
There’s another way
As we’ve seen, brokerage fees can quietly eat into your long-term returns, whether you’re investing small amounts regularly or placing larger trades less often.
Betashares Direct offers a different approach.
Across any ASX-traded ETF, as well as more than 300 ASX-listed shares, all trades are brokerage free. So whether you’re starting small or managing a large portfolio, you invest more of your money – and stay focused on your goals, not your costs. This means you can invest without worrying about how much brokerage fees might cost you in the long run.
In a world where every dollar counts, your choice of platform matters. With zero brokerage and a growing suite of smart, easy-to-use tools, Betashares Direct is built to help you invest with more confidence and lower costs – because building wealth shouldn’t be harder than it has to be.
Find out more about Betashares Direct and our zero brokerage feature here.
