Investment fees
Investment fees
Investment fees are a sensitive issue, as they are often hidden costs that only become apparent after a business has been transacted. By the way, Marvest doesn’t have that. Every investment is free of charge for the investors.
The term “investment fees” is strictly speaking incorrect, because a fee can only be charged for a public-law administrative act and not in the private sector. Accordingly, investment costs or ancillary costs should actually be mentioned, but the term “investment fees” has also established itself and is used colloquially again and again.
What are investment fees or costs?
Costs for an investment or investment fees are basically nothing special and also not shady.
Anyone who uses a service from a bank or credit institution must pay for it. This is done, among other things, in the form of costs for maintaining a stock portfolio or also in the form of a fixed price, which is due with each transaction. Who looks however more exactly, will determine fast, how imaginatively some offerers are.
There are costs for sending notifications, costs for online banking, costs for personal advice and usually also a share of the profit made if fund units are sold. According to the “Directive on Markets in Financial Instruments” (MiFID II), these costs have had to be made transparent since the beginning of 2018, but here, too, a shaken degree of expertise is recommended in order to be able to read and understand the reports and declarations at all.
Nevertheless, there are some recurring “investment fees” that one should be aware of.
Investment fees in the form of a front-end load
The “classic” investment fee is the front-end load. One already knows these costs with the conversion of cash into a foreign currency or also with the purchase of precious metals. A distinction is made between the purchase price and the selling price, and the margin in between is referred to as the front-end load for shares or equity funds.
On average, this is in the range of a proud five percent for equity or mixed funds, but can also be in the range of only half a percent for money market funds.
On the other hand, those who opt for crowd investing do not have to fear a front-end load and the money is invested one-to-one. Analogous to the front-end load, there is now also a return charge here and there. The principle behind it is the same, because here too the bank or the issuing credit institution earns.
Deposit and administration costs
Anyone who has a bank account must have it managed. The same of course also applies to the custody account, so that monthly custody and administration fees are incurred regardless of the amount of the deposit.
On average, custody account fees are around half a percent, while administration fees can reach up to two percent. In addition should be added also still the Depotbankkosten of the fund company, which takes place again within the range of a half to a per cent.
Other costs and investment fees
However, the list of possible costs and investment fees is much longer.
As already mentioned at the beginning, the creativity of credit institutions knows hardly any limits, so that transaction costs can incur brokerage fees and additional fees.
Experts assume that these must be paid also if a fund had to accept a loss in value and in the case of a profit lie partially in the double-digit percentage range. Transparency is only conditionally given and at the end stands an unnecessarily reduced net yield.
Investment without investment fees
An investment is also possible without investment fees. We are not talking about real estate, the purchase of which is consistently increased by a double-digit amount through land transfer tax, brokerage and notary fees, but about crowd investment.
This relatively new form of investment usually runs completely online and both the use of the relevant platforms and the cash deposit are free of charge. In other words, the announced returns are paid out in full – without “ifs and buts”.
Of course, it should be pointed out that crowd investing is regarded as an entrepreneurial activity and therefore also involves risks. However, it is a great advantage that money does not end up with banks or financial institutions from the outset.
If you want to invest your money partout in the stock market, you can alternatively choose funds without a front-end load, in which at least part of the investment fees are waived. However, there is also a business relationship with a bank including costs for account management and other services.
Finally, it should be noted that the quality of a financial product should always be seen from an overall perspective. Investment fees are not a bad thing per se if they result in solid returns. However, their calculation is noticeably simplified by products without any additional costs and you get exactly the percentage that was agreed in advance.