What Is A Flat Rate Fee?

When investing in mutual funds, a flat rate fee approach to charging investors is more commonplace in today’s market.  A flat rate fee, also referred to simply as a flat rate or linear rate fee, is one-time charge for a given time period for performance of a mutual fund.  In this system, percentage based fees are tied to the mutual fund performance, while brokerage firm fees are eliminated.  The flat rate fee is the sole charge for investment in the fund.  The amount obviously will vary greatly according to the size of the investor’s actual investment, or shareholders amount, the size and value of the mutual fund, and also by who administers the mutual fund.  A flat rate fee system is popular with many of today’s investors to eliminate confusion with multiple charging tiers of days past, and also to give predictive earning strategies.  Meaning one knows more or less what they will pay in order to have the mutual fund investment.

Individual Stock Investment: Flat Rate Fees

With more investors investing on their own behalf these days, going it alone without a formal stockbroker’s advice or counsel, the use of flat rate fee stock trades has exploded.  Using this system, online stockbrokers can compete with one another to get investors business.  A one time, per trade fee, the linear rate fee, is used instead of more traditional charging methods such commission based fees.  Using this flat rate fee system, investors can now literally click and buy stocks.  This single transaction will cost a single one-time amount that is pre-established by the stockbroker.  The cost of a flat rate fee stock purchase will vary from stockbroker to stockbroker.  Prices have seen a significant drop in the last 5 years as more and more online investment corporations, online stockbrokers, come into the field of competition.  Flat rate fees are not always a set amount for the life of the account.  Many online stock brokers will now offer a certain amount of free or low cost flat rate fees in order to attract investment customers.  There are bargain basement online stock brokers charging as low as $4.95 per stock purchase transaction, such as Tradeking. While some of the larger more established stock brokerage firms are charging significantly more such as $15-$20.00 per transaction.

Related posts:

1. What Is The Advantage Of Online Stock Trading?
2. What Is A Commission Based Fee?
3. How Many Trades Can I Do?
4. How To Start Investing Online?
5. How To Do Online Stock Trading