Leo’s first lesson was that buying shares often comes with three immediate charges:
: He had to pay the broker's £6.95 fee again to sell.
: Finally, since his total profit for the year exceeded the £3,000 tax-free allowance, he had to set aside a portion of his gains for the HMRC . charges for buying and selling shares
: Because he bought UK shares electronically, the government automatically took 0.5% —another £5.00 —in Stamp Duty Reserve Tax (SDRT) .
: His broker charged a flat £6.95 fee just for executing the trade. Leo’s first lesson was that buying shares often
When the stock price rose and Leo decided to sell, he faced another round of costs:
Leo realized that while he made a good profit on the stock price itself, these layers of charges meant he had to be strategic about how often he traded to keep his returns from being "eaten" by fees. : His broker charged a flat £6
This is a story about Leo, a new investor who quickly learned that the price of a stock is only the first of several costs when trading.