Fees for buying and selling stocks

When you buy and sell stock, you pay a fee to your advisor or investment firm. This fee is called a commission. Commissions reduce the return on your investment in a stock.

Comparing commissions

This table shows the range of fees you might find, depending on the type of firm you invest with. Learn more about how advisors are paid.

Type of firm Do they offer advice? Fees
Full-service investment firm Yes Commission-based account – commissions typically range between $75 and $100 each time you buy or sell.
Fee-based account – you pay an annual fee, which includes the cost of advice and trading commissions. The fee is typically 1-2% of the value of your account.
Discount brokerage firm No Varies, based on the size of your trade and/or account. Typical fees range up to $30 each time you buy and sell, but some start as low as $5.

Example – You invest $1,000 in a stock and make $80 when you sell. That’s an 8% return on your investment. Then, you have to pay a $10 commission. This means you only get to keep $70. So your 8% return drops down to 7%.

You invest $1,000 in a different stock and make only $50 (or 5%). You have to pay the same $10 fee to the advisor. That means you get to keep only $40, and your return drops from 5% to just 4%.

The return you get from any stock investment will be reduced by what you pay in commissions and fees, and any tax you pay on the money you make.

3 ways to reduce commissions

  1. Limit your trading – If you buy and sell stocks often, you’ll pay a lot in commissionsCommissions What you pay to a broker or agent for their services. Often called a “sales commission”. For example, you pay a fee to someone who buys or sell stocks or real estate for you.+ read full definition. This will reduce your returns.
  2. Ask for a lower rate – If you tradeTrade The process where one person or party buys an investment from another.+ read full definition frequently enough to be considered an active trader, your advisor or investmentInvestment An item of value you buy to get income or to grow in value.+ read full definition firm may give you a better deal on commissions.
  3. Pay for the level of service you need – If you’re new to stockStock An investment that gives you part ownership or shares in a company. Often provides voting rights in some business decisions.+ read full definition investing, you may want the advice of an advisor at a full-service firm. If you have experience investing in stocks and doing your own research, you’ll save in commissions with a discount brokerageDiscount brokerage A brokerage firm that charges lower fees to buy and sell investments, as opposed to a full-service brokerage. Does not provide investment advice.+ read full definition.

Key point

The commissions you pay for buying and selling a stock will reduce the return on your investment.

Take action

Reduce the commissions you pay by:

  • limiting your trading
  • asking for a lower rate
  • paying only for the level of service you need
Last updated