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How Much Does it Cost to Invest in Stocks and ETFs?

Reading time: 12 minutes

This article will explain all you need to know about the costs and commissions involved in investing with stocks and ETFs (exchange-traded funds) , such as broker fees, account charges, and investment expenses. We'll also go through a few simple examples for finding the best low-cost stocks and, most importantly, how you can start investing today with some of the lowest fees and commissions available on the market.

Invest In Stocks & ETFs - What Are The Costs Involved?

If you are considering investing in stocks or ETFs, or you are a seasoned investor struggling to locate the best cheap stocks to buy, then this article is a must read for you. You may be investing to build an income-producing portfolio, a long-term retirement portfolio, or perhaps simply as a hobby. Whatever the situation, understanding the costs involved will be a key component of your future success.

What is a Broker Fee?

When buying shares or ETFs, there are costs involved on top of the initial investment. One of the biggest costs involved is the brokerage fee or commission. Essentially, this is the cost your broker will charge to put your trades through to the market. The broker acts as a middleman between you and the stock exchange that lists the company's shares or the ETFs that you want to invest in.

The amount you pay in brokerage fees will vary from broker to broker, as well as from the geographical location of the asset you are purchasing. Historically, brokerage fees were quite high, as they came with the broker's investment advice and recommendations. While broker-assisted trading is still possible, the internet has revolutionised the industry, giving individuals, like you, more power to make their own decisions.

What is a discount broker?

As a result, this gave birth to discount brokerage firms. A discount brokerage is a stock broking firm that allows you to place your orders online, thereby offering you much cheaper fees to trade. As you pay a broker fee or commission on the buying and selling of a share or an ETF, using the right broker is essential when investing in low-cost stocks.

How Do You Calculate Broker Fees?

How broker fees are calculated depends on the broker, so as an example, we'll start with how to calculate broker fees and commissions when investing in stocks and ETFs upon opening a US Dollar or Euro based account with Admiral.Invest.

What is Admiral.Invest?

As the name suggests, Admiral.Invest is an investing account that enables investors to gain access to 15 of the largest stock exchanges in the world, wherein they can trade with thousands of stocks and ETFs. Admiral.Invest offers some of the lowest broker fees available in the industry - as low as $0.01 per share in some cases. The brokerage fee differs depending on whether you are trading shares or ETFs listed in the United States or Europe.

It's also worth checking the conditions involved in 'commission-free' trading, as there may be other hidden fees that could eat into your returns. While commission-free trading may sound attractive, it may prove wiser to go with a more established, regulated broker that offers very low commissions, and is transparent with their costs.

So, if all of this sounds good to you, why not get started with an investing account today? Click on the banner below to open your account!

Invest in Stocks & ETFs

Broker Fee For Trading US Stocks and ETFs With Admiral.Invest

When trading US stocks such as Apple, Facebook, or Google, the commission amounts to $0.01 per share, per side - meaning that you pay a commission to open a position and to close a position. When using the Admiral.Invest stock trading platform, one US share equals one lot. The minimum commission is just USD1 and can be worked out easily using the simple formula highlighted below.

Example 1: Buying US shares in a USD account

  • Account currency: USD
  • Shares to purchase: Apple
  • Currency of shares: USD
  • Volume/amount of shares to purchase: 10 lots
  • Order type: Buy
  • Stock price: $155

Let's say that you want to buy 10 shares in Apple, which is trading at $155 per share:

  • The investment amount would be calculated with the following sum = 10 shares x $155 per share = $1,550
  • The Broker fee would be calculated with the following sum = contract size x amount of shares = 10 lots x $0.01 = $0.1

As the mathematical value of the commission ($0.1) is below the $1 minimum, the broker fee for this particular transaction is just $1.

Example 2: Buying US shares in a EUR account

  • Account currency: EUR
  • Shares to purchase: Apple
  • Currency of shares: USD
  • Volume/amount of shares to purchase: 500 lots
  • Order type: Buy
  • Stock price: $155
  • EURUSD exchange rate: 1.1140

Let's say you want to buy 500 shares in Apple, which is trading at $155 per share.

  • The Investment amount would be calculated with the following sum = 500 shares x $155 per share = $77,500
  • The Broker fee = contract size * amount of shares / EURUSD exchange rate = 500 lots x $0.01/1.1140 = €4.48

Example 3: Selling a US stock position

When calculating the broker fee for exiting your position, the formula would be used in exactly the same way - by using the number of shares you would like to sell, the sell price of the stock, or the ETF your broker is quoting at the time of the transaction, as well as the broker fee of $0.01 per share.

Broker Fee For Trading EU Stocks and ETFs With Admiral.Invest

When trading EU stocks such as Adidas, BMW, or Heineken, the commission charged for one EU share is 0.1% of the transaction's notional value per side, which is simply a calculation of the amount of shares multiplied by the share price. There is also a cost for entering a position as well as closing, or exiting a position.

When using the Admiral.Invest stock trading platform, EUR1 share equals one lot. The minimum commission is just €4, and is worked out using the transaction's notional value. Let's take a look at some working examples.

Example 1: Buying EU shares in a USD account

  • Account currency: USD
  • Shares to purchase: Adidas
  • Currency of shares: EUR
  • Volume/amount of shares to purchase: 100 lots
  • Order type: Buy
  • Stock price: €150
  • EURUSD exchange rate: 1.1140

Let's suppose that you want to purchase 100 shares in Adidas, which is trading at €150 per share:

  • The Investment amount would be calculated with the following sum = 100 shares x €150 per share = €15,000
  • The Broker fee would be calculated with the following sum = Stock price * Contract Size * Commission Rate x EURUSD exchange rate = €150 * 100 lots * 0.1% * 1.1140 = $16.71

Example 2: Buying EU shares in a EUR account

  • Account currency: EUR
  • Shares to purchase: Adidas
  • Currency of shares: EUR
  • Volume/amount of shares to purchase: 50 lots
  • Order type: Buy
  • Cost stock price: €150

Let's say you want to buy 50 shares in Adidas which is trading at €150 per share:

  • The Investment amount would be calculated with the following sum = 50 shares x €150 per share = €7,500
  • The Broker fee would be calculated with the following sum = Stock price x Contract Size x Commission Rate = €150 x 50 lots x 0.1% = €7.50

Example 3: Selling an EU stock position

When calculating the broker fee for exiting your position, the formula would be used in exactly the same way - by using the number of shares you would like to sell, the sell price of the stock or ETF your broker is quoting at the time of the transaction, and the broker fee of 0.1% of the transaction's notional value.

If you'd like to learn more about trading, or if you need to gain practical skills to advance your trading, you can do so by signing up for a FREE Admiral Markets trading webinar hosted by professional trading experts. We present several different daily and weekly trading webinars to suit the various requirements you might have, from beginners to advanced traders, from short-term trading to long-term investments.

If you wish to learn how to trade, or to learn how to open positions on currency pairs using MetaTrader trading platforms, or how to perform long and short trades, our trading webinars are the perfect place to learn all of that and so much more! Gain access to advanced chart analysis of emerging market trends, discussions of upcoming economic events and how they may affect future trading, and more. Click on the banner below to sign up for a free trading webinar today!

Free Live Trading Webinars

What Are Typical Brokerage Fees?

How do Admiral.Invest's fees compare to other brokers?

The first question to consider is whether a broker is a traditional bank, as this is how investors typically bought and sold shares in the past. Today, most banks offer share dealing services, but these usually come with high broker fees and other charges. However, the competition from discount brokerage firms has made the fees for investing much more competitive.

Most banks offer a fixed fee per trade, which may sound enticing, but this comes with extra charges such as high minimum transaction fees. For example, HSBC InvestDirect have a minimum fee of €21.95 per trade. That means that in order to open and close a position you will have to pay €43.90 (€21.95 when you purchase the shares, and another €21.95 when you sell them).

This is a huge difference from Admiral.Invest, where you could for instance, potentially buy €7,500 worth of shares in Adidas for a fee of just €5 to open the position, or €10, to both open and close the position. Other discount brokerages may be more competitive than the traditional banks. For example, the commission per trade for buying and selling US shares with certain brokers is $0.02, with a minimum charge of $15.

Using the first example from the previous section, buying $1,550 worth of Apple shares at a price of $155 should cost $0.2 ($1,550 / $155 = 10 shares x $0.02). However, because there is a minimum charge, it would cost $15 in reality.

With Admiral.Invest the fee is just $0.01 per share, resulting in a cost of $0.1 (for US shares). This also triggers Admiral.Invest's minimum fee, which is just $1 - a huge saving by any standard! You can read more about our commissions on our website: contract specifications.

Other Investment Expenses to Know About

While the broker fee is the main cost of investing in stocks and ETFs, there may be some additional expenses to consider, depending on your broker. These include:

Real-time data feeds

To access the real-time data of a stock or ETF's price movement, the corresponding stock exchange usually charges a fee for it. Some brokers may pass this on to their users. For example, obtaining real-time prices of shares with certain banks will have an associated cost per stock exchange that the user requires access to.

So, to access the live prices of stocks listed on the New York Stock Exchange will cost $7 per month, the Nasdaq Stock Exchange another $7 per month, the London Stock Exchange £7 per month, the Deutsche Bőrse Exchange €7 per month and so on. The monthly fees can add up quite quickly!

Account maintenance fees

There are some brokers and investment houses that will charge a fee for possessing an account with them. After all, the maintenance of their platform, customer service support, regulations, and staff members will all incur expenses. The question is whether or not they will pass it on to you.

For example, some institutions charge £1.80 per month as a fixed account admin fee, whereas some banks charge a minimum of £4 per month if you have cash in their account, or if you have an open investment. Again, these monthly fees can start to add up - even when you are not using the account. If you are considering trading with Admiral Markets you might be pleased to know that there are €0 account maintenance fees, and €0 custody fees.

Platform fees

Analysing the chart of a stock price can help with identifying patterns and signals for time stock purchases. The maintenance and stability of a state-of-the-art trading platform can be expensive, and some brokers will pass on the cost to the user. Fortunately, Admiral.Invest account holders receive all of the above completely free.

Many brokers will charge for these additional features, which can eat into your investment returns and turn low cost stocks into expensive ones. After opening an account you can access some of the lowest costs of investing with a suite of complementary features and support for supercharging your investing process.

Why Invest in Stocks and ETFs With Admiral.Invest Today?

Admiral.Invest enables you to invest into stocks and ETFs from fifteen of the largest stock exchanges in the world. You also have access to:

  • Free real-time market data
  • Complimentary premium quality market updates
  • Low-transaction commissions
  • No account maintenance fees
  • State of the art trading platforms
  • Dividend payouts

Accounts are available to all clients who accept the general terms and conditions, with a minimum funding requirement of just 500 EUR or 500 USD. After opening an account you can invest in some of the world's largest publicly traded companies, as well as unique offerings from the ETF sector. To get started, click on the banner below and open your investing account today!

Invest in stocks

This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.

Risk Warning

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.