Commission

A commission is a fee you pay a broker or a salesperson for carrying out a trade or for selling you an investment. It is charged per transaction, so it is separate from the yearly cost of owning a fund.

If a broker charges $5 a trade, buying $500 of stock costs you $505, and selling it later costs another $5, so $10 of commissions leaves your money whatever the investment does.

The commission is disclosed on your trade confirmation, the notice sent after each trade. Some firms currently advertise zero-commission trading while making money in other ways, and FINRA, a US brokerage regulator, calls free trading a way to attract customers. A salesperson paid by commission earns more when you buy, a conflict worth keeping in mind, so ask how a seller is paid and get fees in writing.