Investing 101: How to Avoid Investment Platform Fees

Investing your money is a great way to grow your wealth, but it can come with additional fees. These fees can add up over time and potentially eat into your returns. As a beginner investor, knowing how to avoid investment platform fees can save you money and help you achieve your financial goals faster. 

In today’s 2-Minute Masters, we will share some tips on how to avoid investment platform fees and ultimately grow your investments more efficiently.

Look for Commission-Free Options

Before you start investing, knowledge is power. It's essential to take the time to understand the different types of fees that come with investing, specifically the fees that come with an investment platform. One of the easiest ways to avoid platform fees is to look for commission-free options. Many investment platforms, offer commission-free trading for stocks, ETFs, and options. This means you can buy and sell assets without paying a fee.

Watch out for Hidden Fees

Investment platforms may also charge hidden fees, such as account maintenance, account transfers, inactivity fees, or account closure. Be sure to read the fine print before signing up for an investment platform and look out for any additional fees that may not be obvious.  Make sure you take the time to read the platform's pricing policy, so you're aware of what's being charged.

Choose Low-Cost Index Funds

Index funds are a type of mutual fund that tracks a specific market index, such as the S&P 500. They typically have lower fees than actively managed funds since they don’t require as much maintenance. By investing in index funds, you can avoid high management fees and potentially improve your investment returns.

Consider Using Robo-Advisors

Robo-advisors are automated investment services that use algorithms to make investment decisions for you. They typically charge lower fees than traditional human financial advisors, and some may even offer fee-free options for smaller account balances.  If you're a beginner investor and looking for a low-cost investment alternative, or you don’t want to deal with the complexity of managing your own investments, using a robo-advisor may be an option for you.

Stay Invested for the Long-Term

One of the most effective ways to avoid investment platform fees is to stay invested for the long-term. Day trading might be tempting due to the possibility of making quick profits. However, it comes with risk and significant costs, mainly due to high fees charged for trades. Having a long terms approach to investing can help avoid unnecessary fees that drain your returns.

Today’s Takeaway:

Investment platform fees can eat away at your investment returns over time. But with a little knowledge and research, you can avoid or minimize these fees and maximize your investment returns. By looking for commission-free options, considering robo-advisors, watching out for hidden fees, comparing fees across different platforms, and investing in low-cost index funds, you can make sure that you’re not paying more than you need to for your investments.

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The content of this newsletter is strictly for educational purposes and does not amount to professional advice. It's not a substitute for independent financial advice from a professional who can advise on your circumstances and individual situation.