brokerage
A firm that buys and sells financial assets on behalf of clients, or the fee charged for such services.
Example
“He opened a brokerage account to start investing in stocks and ETFs.”
Memory Tip
BROKER-age — the place (age = business) where brokers work.
Why It Matters
Understanding brokerage costs is crucial because these fees directly reduce your investment returns. Whether you are buying stocks, bonds, or other securities, knowing whether you are paying per-trade commissions or using a flat-fee structure can significantly impact how much wealth you accumulate over time.
Common Misconception
Many people believe that all brokerages charge the same fees or that brokerage services are free. In reality, fee structures vary widely between firms, with some offering commission-free trading while others charge per transaction, and some use tiered pricing based on account size or trading frequency.
In Practice
If you use a brokerage that charges 10 dollars per trade and you make 50 trades in a year, you will pay 500 dollars in fees. However, if you switch to a commission-free brokerage, those same 50 trades cost you nothing, leaving an extra 500 dollars to remain invested and grow.
Etymology
From broker + age — the business or practice of a broker.
Common Misspellings
Trade stocks, options & crypto commission-free
Related Terms
More in trading
Other trading terms you should know
See Also
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