Sunday, January 4, 2009

Cheapest brokerage fee will cost you MORE ?

The cheapest brokerage fee to trade a stock in KLSE (MY) I can find is from Jupiter, offering 0.05% with a minimum of RM 8.

Normal online trade brokerage fee is 0.42% with a minimum of RM 12.
Jupiter also offers 0.2% with RM 12 minimum for non cash up front account.

click on image to view larger table

You may think since 0.05% and RM 8 are both the lowest, then picking this type of account will definitely save more ?

Well, lets see ...

If your average trade size is RM 1,000 then you would be paying RM 8 each time, equivalent to 0.8% and not the said 0.05%. Guess what, 0.8% is also much higher than 0.2% and 0.42% isn't it ?

In order to enjoy the said LOW brokerage fee, you will need to calculate the minimum trade size needed.

For 0.05% and RM 8, it comes up to RM 16,000 !! If you never trade up to that amount in every transaction, you actually NEVER enjoy the 0.05% brokerage rate AT ALL !!

So if you want to save in brokerage fee, which account type will you get ?