Investing fees explained: the five costs that eat small portfolios

Fees are the one part of investing you fully control. On a small portfolio, they can quietly take more than the market gives back. Here are the five that matter, in the order they usually hurt.

1. Currency conversion (FX) fees

If you buy shares priced in dollars or euros with money in another currency, your broker converts it — and takes a cut. That cut can be a stated fee or hidden in a worse exchange rate (the spread).

Example: a 0.5% FX fee on a €100 monthly purchase costs €0.50 each time, and again when you sell. Some brokers charge much more, some much less.

Keep it low: buy listings in your own currency when available, or use a broker with cheap conversion.

2. Trading commissions

The fee charged per order. Flat fees hurt small orders most: a €2 commission on a €50 purchase is 4% gone immediately.

Keep it low: invest less often in larger amounts, or use free ETF savings plans if your broker offers them.

3. The bid–ask spread

Every share has a price at which you can buy (the ask) and a slightly lower price at which you can sell (the bid). The gap is a hidden cost each time you trade. Large, popular ETFs and shares have tiny spreads; small ones can be wide.

Keep it low: stick to large, liquid funds and trade when the market is open, not in the first minutes.

4. Custody, account and inactivity fees

Some brokers charge just for holding your account, a percentage of your portfolio each year, or a fee if you don’t trade for a while.

Keep it low: for a small, long-term portfolio, prefer brokers with no custody or inactivity fees.

5. Fund costs (TER)

ETFs and funds charge a yearly total expense ratio, taken automatically from the fund’s value. Index ETFs often cost 0.05–0.30% a year; active funds can cost 1–2%.

Why it matters: the difference compounds. See what 1% a year does over 20 years in our compound interest calculator.

Add it up

Before choosing a broker, estimate a typical year: how many purchases, how much each, in which currency, plus any yearly fees. The cheapest broker for a trader is often not the cheapest for someone investing €100 a month. Our broker checklist helps you compare.