YouTube Comment Question: High Fees and Internal Costs in Taiwan Securities Are a Main Reason People Avoid Them

YouTube comment question:

[The high transaction fees and internal fees of Taiwan's domestic securities industry are also a main reason people do not want to use it.] Easy Investment Chat CLEC Investment Channel. Post date: July 9, 2020

Reply:

Investment costs in Taiwan are relatively high. But capital risk should be the first consideration before investing. If the money is lost through failure, fraud, or theft, everything is gone.

This is why we have always recommended everyone buy Franklin Technology through Franklin Templeton Investments with no transaction fee. FundRich also has almost no transaction fees.

Sub-brokerage purchases may have a 0.5% fee. But if you hold QQQ and SPY for life, you spend 0.5% of the initial capital once in your life, which is still acceptable. But when selling through sub-brokerage, the assets have already grown, so 0.5% becomes quite high. For example, if the purchase was $10,000 U.S. dollars, or NT$300,000, and after 40 years it becomes $500,000 U.S. dollars, or NT$15 million, the 0.5% fee when selling will deduct $2,500 U.S. dollars, or NT$75,000. So over the long term, buying ordinary funds through Franklin Templeton Investments and FundRich, with no fee to buy and no fee to sell, is relatively cost-effective.

For buying funds through ordinary banks, a single transaction may be charged 2%. As long as you only buy and do not sell, hold forever until you need money, and then sell only the amount needed, you are charged only once on the initial cost in your lifetime. Compared with long-term investment returns of 40 or 50 times, this is still quite acceptable.

The highest investment cost is not the one-time fee, but the fees generated by frequent trading.

Taiwan stock buying and selling costs 0.6%. If turnover happens ten times a year, that is 6%. That is frightening. If it is funds and you follow a financial advisor who switches funds back and forth four times a year, 12% disappears.

So a lifetime 2% fee or a sub-brokerage 0.5% fee is still acceptable. The key is: do not trade.