Ever wondered after the start of purchase from your broker you notice right away that your portfolio is red?
In short, you have negative gains right away even to the point when your average is lower from the current market price.
The only reason why you have negative portfolio because of your broker's trading fees involved.
Let me show you a sample below.
 |
| average price lower than market price |
COL Financial broker:
buy order fees (added to gross)
➤commission : 0.25% of gross amount paid
➤vat : 12.00% of commission
➤PSE trans fee : 0.005% x gross amount paid *
➤SCCP : 0.010% x gross amount paid
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sell order fees (deducted to gross)
➤commission : 0.25% of gross sales
➤vat : 12.00% of commission
➤PSE trans fee : 0.005% x gross sales *
➤SCCP : 0.01 % x gross sales
➤Sales tax : 0.60% x gross sales (2018 TRAIN Law formerly at 0.50%)
-------------------------------------------------------
*some brokers don't charge for PSE trans fee
*Lately First Metro Sec broker has already started to include PSE transaction fee.
BDO Nomura Broker
Has almost the same fees with First Metro Securities above.
Sample Computation:
STOCK: BLOOM
➤using above fees from COL:
Funds : ₱5,000
market price : ₱6.01
no. of shares : ?
Obviously you can not buy 1000 shares, since 1000 x 6.01 will be beyond your ₱5,000 funds available.
900 shares may not also be feasible with your current funds which results to ₱5,409 + fees.
Our option to try at 800 shares since multiplying to 6.01 would give us ₱4,808 with some extra room for the fees.
Computation when buying:
➤gross amount : 6.01 x 800 shares = ₱4,808.00
➤commission : 0.25% x Php 4,808 = ₱ 12.02
➤vat : 12.00% x Php 20 = ₱ 2.40
➤PSE trans fee : 0.005% x Php 4,808 = ₱ 0.24
➤SCCP : 0.010% x Php 4,808 = ₱ 0.48
therefore:
₱4,808.00 gross amount
₱20.00 commission
₱2.40 vat
₱0.24 PSE trans fee
₱0.48 SCCP
--------------------------------------------
₱4,831.12 total amount to pay
Computation when selling:
Say you were able to sell your shares @ ₱6.50
Say you were able to sell your shares @ ₱6.50
➤gross sales : 6.50 x 800 shares = ₱5,200.00
➤commission : 0.25% x Php 5,200 = ₱ 13.00
➤vat : 12.00% x Php 20 = ₱ 2.40
➤PSE trans fee : 0.005% x Php 5,200 = ₱ 0.26
➤SCCP : 0.010% x Php 5,200 = ₱ 0.52
➤Sales tax : 0.60% x Php 5,200 = ₱ 31.20 (before at 0.50%)
therefore:
₱5,200.00 gross sales
less the following:
₱20.00 commission
₱2.40 vat
₱0.26 PSE trans fee
₱0.52 SCCP
₱31.20 Sales tax
--------------------------------------------
₱5,145.62 total amount received
The 8K Rule
If you have bigger funds on your account make it a habit to at least spend worth ₱8,000+ when buying shares to save yourself from losses in paying the minimum ₱20.00 commission from brokers.
Sample:
You only spend ₱3,000 worth of shares x 0.25% commission is ₱7.50, but you will still pay for the minimum ₱20.00 fee.
You lose an amount of ₱12.50 at the start and that small amount you could have already purchased 2 more shares @ ₱ 6.01
Every cents counts when you trade or invest in the market keep that in mind.
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