FRICTIONAL EXPENSES AND STOCK TRADING Your investments could be costing you a tidy sum of money and you might not even be aware of it. These extra expenses that have to be born by investors besides the money spent on investment, in order to invest in the stock market are called frictional expenses. Frictional expenses could cause immense impairment to one’s financial resources because in the long run these are the expenses that add up to a colossal amount of money. Fantasy Stock Trading would be a novel way of approach for a novice who has little or no idea about the stock market, to get a fair idea about the workings of the stock market and that would also include hidden expenses, which come along with making investments. These expenses might be huge but even seasoned investors might not be paying heed to them and in the process end up with a significant percentage of foregone wealth in the long run. Thus as a beginner we recommend you to try the Fantasy Stock Exchange game to mitigate all the risks involved as you would be dealing with make-believe money and it would definitely be a more viable option than getting into the ins and outs of the stock exchange without having any substantial knowledge on it. Frictional Expenses are one and many. Fantasy Stock Exchange will be the teacher that shall guide you how to reduce your frictional expenses till a large extent. The topmost expense on the list of fictional expenses being the money to be spent as commission to the stockbrokers and fees. However in the recent time with the introduction of the discount broker the situation has changed quite a bit because now investors get to place an order online for the shares of the stock and pay a particular minute amount as commission while of the investor decides to go via a bank and a broker then he would have to fish out some amount and added to that 1.5 % of the primary value of the investment. So over a period of time an investor would be loosing out on a sizeable fortune. Another frictional expense would be the amount of the investor’s principal that is given to the market maker and is the difference between the price willing to be paid by the buyee and the price ready to be paid by the seller. So just like brokerage commissions this expense too in the long run adds up to me foregone wealth. |
