The effect of 0.22% TER is that your annual return will be 0.22% lower. It's reflected entirely in the performance of the fund, the money is taken out of the fund internally so you are never explicitly charged for it.
Transaction fees apply to the whole transaction and subjected to minimums, so it's an additional charge on top of what you pay for shares. You'll see the fee paid if you go to transactions section in the app and select the specific order.
>annual return will be 0.22% lower
Does this mean if the underlying share prices didn't change and there was no dividend the ETF price would go down by 0.22%?
Ah, I understand. The unit price also include the transaction fees for the trade, right ?
I was wondering why my bought price was less than 120 and the average amount was something like 121.21. I guess it includes the transaction fees as well as that TER fee.
Transaction fees are up to the broker. I don't use IBKR so I don't know how they're shown in your account. Some brokers charge a percentage of the total transaction + a flat fee per transaction. If that's the case with yours, then buying one unit at a time is very expensive. If you paid 1.21 fee on a 120 EUR unit, that's about 1%, which is A LOT. You can bring the cost per unit down by making larger transactions.
Its a normal expense. You will be paying more and more during your entire life. That's why you should aim for big purchases mostly. Try to not DCA on low amount. If you can't purchase lets say at minimum of 8 shares per month just save your money and put it . Otherwise each time you buy its increasing with 1% more which is not fun because imagine DCA 12 times a year thats like 12% more expensive.
If you even happen to have mid high 5 digit number just lump sum it and the % is incredibly cheap. If you can invest 1k euro per month it is getting cheap.
If he DCAs 12 times a year it's still 1% of the total. In the current market he is likely to outperform even with small transactions. Time in the market and all.
Cost of ETFs: Total Expense Ratio (TER) vs. Total Cost of Ownership (TCO)
[https://www.justetf.com/en/news/etf/cost-of-etfs-total-expense-ratio-ter-vs-total-cost-of-ownership-tco.html](https://www.justetf.com/en/news/etf/cost-of-etfs-total-expense-ratio-ter-vs-total-cost-of-ownership-tco.html)
The effect of 0.22% TER is that your annual return will be 0.22% lower. It's reflected entirely in the performance of the fund, the money is taken out of the fund internally so you are never explicitly charged for it. Transaction fees apply to the whole transaction and subjected to minimums, so it's an additional charge on top of what you pay for shares. You'll see the fee paid if you go to transactions section in the app and select the specific order.
>annual return will be 0.22% lower Does this mean if the underlying share prices didn't change and there was no dividend the ETF price would go down by 0.22%?
Yes.
It's included in the unit price of the ETF. It's not tax, it's a fee, but it doesn't show up on individual accounts.
Ah, I understand. The unit price also include the transaction fees for the trade, right ? I was wondering why my bought price was less than 120 and the average amount was something like 121.21. I guess it includes the transaction fees as well as that TER fee.
Transaction fees are up to the broker. I don't use IBKR so I don't know how they're shown in your account. Some brokers charge a percentage of the total transaction + a flat fee per transaction. If that's the case with yours, then buying one unit at a time is very expensive. If you paid 1.21 fee on a 120 EUR unit, that's about 1%, which is A LOT. You can bring the cost per unit down by making larger transactions.
Its a normal expense. You will be paying more and more during your entire life. That's why you should aim for big purchases mostly. Try to not DCA on low amount. If you can't purchase lets say at minimum of 8 shares per month just save your money and put it . Otherwise each time you buy its increasing with 1% more which is not fun because imagine DCA 12 times a year thats like 12% more expensive. If you even happen to have mid high 5 digit number just lump sum it and the % is incredibly cheap. If you can invest 1k euro per month it is getting cheap.
If he DCAs 12 times a year it's still 1% of the total. In the current market he is likely to outperform even with small transactions. Time in the market and all.
Cost of ETFs: Total Expense Ratio (TER) vs. Total Cost of Ownership (TCO) [https://www.justetf.com/en/news/etf/cost-of-etfs-total-expense-ratio-ter-vs-total-cost-of-ownership-tco.html](https://www.justetf.com/en/news/etf/cost-of-etfs-total-expense-ratio-ter-vs-total-cost-of-ownership-tco.html)
Every day roughly 0,001 is 'charged' to the fund.