Chapter: 6 Understanding Return

Section: 3 Costs Attached to Investments in Stocks

It should be noted that there are transaction costs charged by brokers when calculating return. In addition, in developed markets taxation is levied on investment income. All such expenses relating to stock investment should be deducted from the return in order to arrive at the true profit.

Transaction cost differs from country to country. Approximately the broker charges 1% of the investment value as brokerage.