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Stocks: What does rip-off fee mean?

What exactly do you need to learn when you foray into the world of stocks? Let us tell you that it is not sufficient to acquaint yourself with a few basic terms associated with stocks. You need to have a nuanced understanding of the way the stocks function. In this particular post, we will be discussing a very important part of the stocks– the rip-off fees charged by brokers. Let us discover more in this regard.


What should you find out about the rip-off fees in stocks?

What is the primary function of a stockbroker? The simple answer to that question would be to identify profitable investment opportunities for the investors so that they (i.e. these investors) can earn substantial returns and then pay service charges to the stockbroker in accordance.

However, quite contrary to what should have happened ideally, unscrupulous stockbrokers generally look for all avenues to eat into your returns. If you don’t act prudently as an investor, you will not even know that these stockbrokers are charging you other fees besides their commission! There are many ways in which your stockbroker might rip you off your money. For instance, they can jolly well cancel trades from your accounts to put money in their own pockets and then end up pretending that these profits were generated from their own accounts. They can charge you the 12b-1 fees, which is the annual compensation that you pay your broker plus the administrative and management fees.

However if you are prudent enough, you would still be able to avoid getting ripped off by your broker. One of your first responsibilities would be to acquaint yourself with the true credentials of the broker before investing in their services. Don’t be fooled by the so-called certifications mentioned on the websites. Take the trouble to reach out to the clients of the broker personally.

Try to educate yourself about the vision which has shaped the inception of the investment firm. Leading investment firm Degiro, for example, had recently introduced its online platform to put an end to the great UK rip-off. Its director Gijs Nagel observed that the market access shared by the institutional and retail investors is “completely unnecessary and nothing short of a scandal”.

And that…

“All of our progress has culminated in this point, and the UK is a natural next step for us. We’re excited to be launching in Europe’s financial heart and we look forward to liberating UK investors from the hidden costs that have plagued them for so long.”

It is important for you to understand that you cannot end up accepting every offer which is forced down your throat by your broker. Yes, it is understandable that your broker identifies the investment opportunities for you. However, it wouldn’t be prudent on your part to let the firm take all financial decisions for you. The offers we are talking about here are not meant to boast your portfolio every time. So, it is important to choose something only after scrutinizing offers thoroughly.