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23 October, 16:18

You have a $106 comma 000 portfolio comprising 10 stocks. You trade each stock five times this year and each time you trade, you pay about $29 in commissions and spread. You have no special knowledge, so you earn only the average market return of 14 % on your investments. How much lower will your total return be because of your trades?

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  1. 23 October, 17:54
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    My return will be 1.37% lower.

    Explanation:

    Total expenditure:

    = Number of stocks*Number of times*Commission and spread per trade

    = 10*5*$29

    = $1,450

    In % form:

    = $1,450/$106,000

    = 1.37%

    My return will be 1.37% lower.
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