01 / 10
Investing Can Have Costs
💰 ➜ 📊 ➜ 💵
Your investment return is not always the same as the
amount you see on the share price.
When you buy or sell an investment, there may be costs involved.
These costs can come from different parts of the investment
process.
For example, there may be brokerage charges, transaction fees,
taxes, levies or other applicable charges.
Understanding these costs is important because even small
charges can reduce the amount of money you finally receive.
Simple idea: Always understand the costs
before making an investment transaction.
02 / 10
Why Do Investment Costs Matter?
💰
Your Money
→
📊
Investment
→
💵
Your Return
Suppose your investment makes a profit. That does not
automatically mean the whole profit becomes your final return.
Transaction costs and other applicable charges may reduce
the amount you receive.
A smart investor looks at both the potential return and
the costs involved.
03 / 10
What Types of Costs Can You Come Across?
🤝
Brokerage
Fee charged for executing a transaction.
🧾
Transaction Charges
Other charges connected with a trade.
🏛️
Taxes & Levies
Government or regulatory charges that may apply.
The exact charges can depend on the type of investment,
the transaction and the service provider.
Fees and charges can change. Always check the current
schedule of charges before investing.
04 / 10
Understanding Brokerage
👤 ➜ 🤝 ➜ 📊
Investor → Broker → Market Transaction
When you buy or sell shares through a stockbroker, the broker
may charge a brokerage fee for providing the service.
The amount may depend on the value of the transaction and
the broker's current fee structure.
Different brokers may have different charges, so an investor
should understand the applicable fee schedule before placing
an order.
Do not assume every broker charges exactly the same amount.
Check the broker's current charges.
05 / 10
Costs When You Buy
💰
Amount for Shares
+
🧾
Applicable Costs
=
💵
Total Amount Paid
When you buy shares, the amount you pay may include more
than simply the quoted value of the shares.
Depending on the transaction, there may be brokerage,
taxes, levies or other applicable charges.
Simple Example
Imagine you want to buy shares worth K5,000.
If applicable charges add another K100, the total cost
of the transaction would be K5,100.
The actual charges depend on the current applicable
fee schedule.
06 / 10
Costs When You Sell
📊
Sell Shares
→
🧾
Applicable Costs
→
💰
Net Amount
Investment costs do not only matter when buying.
There can also be costs when you sell.
This means you should consider transaction costs when
calculating how much money you actually receive from a sale.
Think about both sides:
What will it cost me to buy, and what will it cost me to sell?
07 / 10
Costs Can Reduce Your Profit
Investment Profit
− Investment Costs
= Net Return
Imagine you buy shares for K10,000 and later sell them
for K11,000.
Before costs, the difference is K1,000.
If the total applicable costs connected with the transactions
are K200, the amount left after those costs would be K800,
before considering any other applicable tax or charges.
Looking only at the buying and selling price can give you
an incomplete picture of your actual return.
08 / 10
Small Costs Can Add Up
🪙 + 🪙 + 🪙 + 🪙
A small cost repeated many times can become significant.
One small transaction charge may not seem like much.
But if you make many transactions, the total amount can
become much larger.
This is one reason investors should avoid making transactions
without a clear reason.
Before buying or selling, ask yourself whether the transaction
makes sense after considering the costs involved.
Remember: Frequent buying and selling can
create more transaction costs.
09 / 10
Always Check the Charges
Investment charges can change, and different services can
have different fee structures.
Before investing, check the current information provided by
your broker and the relevant market or regulatory authorities.
- Ask your broker about applicable charges.
- Check the current fee schedule.
- Understand charges before placing an order.
- Keep your transaction records.
- Consider costs when calculating your return.
Good investor habit:
Never guess investment costs. Check the current charges.
10 / 10
🎓
Lesson Complete!
Well done! You now understand why investment costs matter.
Gross Return − Applicable Costs
= Net Return
Key message:
Before investing, understand the costs of buying and
selling. Fees, taxes, levies and other applicable charges
can reduce your final return.
Always check the latest charges with your broker and
relevant authorities before making a transaction.
When you start investing, it is easy to focus only on the price of a share and how much money you might make. But there is another important part of investing that every beginner should understand: costs.
Buying and selling investments can involve different charges. Depending on the transaction and the service you use, these may include brokerage fees, transaction charges, taxes, levies and other applicable costs.
For example, imagine you buy shares worth K10,000. Later, the shares are worth K11,000 and you decide to sell. At first, it may look like you have made K1,000. But the amount you finally receive can be different after applicable costs are taken into account.
This is why investors should learn to look at their net return, rather than only looking at the change in the share price.
Investment costs can also become more important when someone makes many transactions. A small charge may not seem serious when you look at one transaction, but repeated buying and selling can cause those costs to add up.
In this lesson, you will learn about the common types of investment costs, how brokerage works, why buying and selling can both involve charges, and how costs can reduce your final return.
The exact charges applicable to an investment can change, and different brokers or transactions may have different fee structures. Always check the latest information with your broker and the relevant authorities before making an investment.
