Lower investment rates

When investing, a lot of money can be left hanging. This is because the bank can charge high investment costs, such as transaction costs and a custody fee. In recent years there has been more competition on the market. Firstly, transaction costs have fallen due to the Internet, but since 2005 a number of newcomers have entered into competition with the established banks. Investing can become an expensive joke. And that’s not even considering the possibility that your shares will become less valuable. It concerns the costs you spend on investing with the bank or broker. Buying shares is free. This is because it is not possible to invest directly on the stock market. This must always be done through a bank or other recognized institution. They are the intermediary through whom the shares come to you. However, the bank does not do this for free.

Investment rates

The bank may charge various costs. Firstly, there is the custody fee. This is a levy on the amount you have in shares. At many banks this is 1 percent of the value per year. Other common costs are transaction costs. That is an amount you pay when you buy shares. There is often a basic amount and you also pay a certain percentage, for example 0.20 percent of the value of the investment. These transaction costs are charged both when buying and selling shares. That is why it is not attractive to buy only a small number of shares. Then the costs are disproportionately high and it becomes difficult to earn back your investment. Other costs that are often charged are costs for paying out dividends and the so-called spread. The manager and broker often share the difference between the ask and the bid price. These costs are ultimately passed on to the investor.

Lower investment rates

In recent years there has been increased competition, which has caused investment rates to slowly drop. This is because several new players have appeared on the market and are competing with established banks such as ING and ABN Amro. These newcomers include Binck Bank and Alex, part of Rabobank. It has been possible to invest on the stock exchange through these banks for about five years now. They immediately fell well below the transaction costs of the other banks. As a result, they were also forced to reduce their transaction costs. In 2005, the average transaction costs were approximately 12 euros per investment, in 2010 this fell to 8 euros.

Competition in the market

At the same time, it is claimed that it can be done a lot cheaper. In April 2010, an article appeared in De Telegraaf stating that various brokers and banks abroad charge much lower transaction costs. It could only be a matter of time until these banks focus on the Dutch market. Then the Dutch banks would still be forced to lower their rates further. This would also make it more attractive to buy relatively small blocks of shares. This would ultimately be beneficial for the stock market because there will be more trading.