Such a spoken term, but do you know what the administration fee is? If not, don’t worry, because we will make a summary on this subject, in this content! But, do you want to invest in the stock market? Before buying any investment fund to earn your hard-earned money, you need to understand what the Management Fee is.
Without this amount charged, it can lead to securities shares not being well managed, creating an investment bubble and when it bursts, it generates a major economic crisis.
In this text, therefore, the objective is to explain in detail what the management fee means in the financial market, more precisely in the stock exchange. The article in question is ideal for anyone who wants to invest without falling into major pitfalls in the future.
What this article covers:
What is an administration fee?
You pay the administration fee in condominiums, clubs you are associated with, enrollment and your investment is no different. It’s a fee you pay for the service managed by a professional who understands the financial market like the back of his hand.
And it needs to be seen with good eyes, since the management fee can imply the return on your investment.
Each investor is responsible for one or more securities accounts and thus needs to pay a fee for this investment to continue circulating in the financial market. One of the investments that use management fees a lot is the real estate and private pension fund.
However, other variable income securities also use the management fee to keep their business active.
What is the management fee charged by investment funds?
If you invest in different forms of income, be aware that the management fee will differ, as each investment fund has its own management fee and needs to be explicit in the Securities Commission (CMV). And this percentage is fixed!
Therefore, it is important to know if any investment fund has any management fees, as any fluctuation can leave the investor in the red.
How is the management fee calculated?
The calculation of the management fee is not based on interest, but based on the following factors: levied on the equity of the fund share, percentage per year charged and with daily deduction, it helps to reduce the value of the share. The form of the calculation consists of the following:
Share value = Equity ÷ number of shares issued
For those who don’t know, net worth is the sum of all the resources made in the fund by its investors, discounting all your obligationswhich includes the administration fee.
Other common rates existing in the financial market are performance, entry, exit and taxation.
What is the impact of the management fee on investment funds?
The importance of the management fee is to define your investor profile and your financial objectives. If you are more conservative and prefer not to take risks, look for investments where the management fee has little impact on your net return. Therefore, the importance of always researching the price of security values and regularly monitoring the quotation of the day.
In addition, if you want to invest without worrying about the management fee, there are titles that do not charge this amount, which makes your financial return better and more beneficial.
With that, we reached the end of this content, and now you know what the management fee is, share it with friends and family, especially those who are interested in investing but don’t know where to start.