Brokerage is the name given to the fee charged by brokers to carry out transactions for the purchase and sale of variable income assets, being their main source of revenue.
To know what is brokerage is mandatory for anyone interested in the financial market and wants to build equity with variable income.
Even though it is not the only element to be taken into account when choosing a brokerage firm, understanding this rate is an important factor in making this decision.
In addition, getting to know operational costs of its applications is essential to plan financially and make a healthy management of your investment portfolio.
With that in mind, we explain in this post everything you need to know about brokerage: what it is, how it works and what types of applications this fee affects. Want to know more? Check it out below!
What is brokerage?
Brokerage is the fee charged by securities brokers to carry out transactions for the purchase and sale of variable income assets. It serves to cover the costs involved in these transactions and to remunerate the work of the brokerage firms, being its main source of revenue.
Decisions about fee amounts and how they are charged are made individually by each broker, following their own strategies and guidelines.
In recent years, many of them have adopted the policy of zero fee for investments by individuals, in order to attract more customers and profit from their loyalty.
Why is it important to know this rate?
Knowing what brokerage is and how it works is essential for investing more intelligently and consciously. This is because this rate is part of the set of operating costs that decrease the investor’s profit, as they take down a significant amount of their applications.
This means that you can compromise your earnings if you don’t look for the best rates, even if you choose the most profitable investments on the market. In the long run, the impacts of a bad decision can be huge.
As it has such a big influence on the results of investments, the brokerage fee is an important competitive differential for brokers: they compete all the time to offer the best conditions to customers.
Therefore, before investing in variable income, get to know the rates charged by the brokerage firms, evaluate the cost-benefit ratio and see if they fit your investment strategy. This way you ensure that brokerage costs do not get in the way of your budget.
>> Do you want to know more about choosing your broker? Check out this other blog post:
What is the best broker to invest in? Why invest and how to choose <
What are broker fees?
As stated earlier, each broker is free to determine how it will charge its brokerage fee. Although policies vary, they always fall into three types: fixed, variable or mixed brokerage. Learn more about each one below.
In this model, a fixed amount for each purchase or sale order issued by the investor. If the person carries out six transactions in the day, the brokerage will be charged six times.
The amounts moved do not matter: be it an investment of R $ 100 or R $ 100 thousand, the rate will be the same.
In variable brokerage, a fee is charged percentage of the total value of operations. In other words: if an investor makes 8 investments of R $ 100 each, with a 10% fee per transaction, he will spend R $ 80 on brokerage only.
Mixed brokerage crosses the characteristics of the fixed with the variable, applying a fixed rate + percentage on the total invested. This does not necessarily mean that it is a more expensive model than the others.
When offering the mixed rate, brokers usually calculate it so that it is as attractive as the fixed and the variable.
What is the difference between brokerage and other costs in the equity market?
Brokerage, custody, fees … Anyone who has read a little about variable income has certainly encountered these terms a few times.
They are all related to extra costs of the variable income market, but each one works in a different way. Next, find out more about these and other fees that affect your investments.
Many people think that the custody fee is synonymous with brokerage, but they have different purposes.
Although it is also charged by brokerage firms, custody is related to the costs of storage of securities or shares you have in your wallet. In other words, it is as if it were the collection of the rent where your applications live.
Like brokerage, the custody fee can be fixed or variable, but many brokerages decide to zero this cost for customers. This exemption can be integral or from a specific volume or type of investment.
The Services Tax (ISS) is levied on the value of the brokerage fee with rate of up to 5%. That is, if you pay a brokerage fee of R $ 10 when carrying out a transaction, the value of the ISS will be, at most, R $ 0.50.
You emoluments are the costs charged by Stock Exchange (B3) on the purchase and sale of assets. The amount of this fee varies widely, as it depends on the type of asset and the financial volume traded.
Investments in variable income have an incidence of Income Tax (IR). For operations that last more than one day, the rate is 15%; for negotiations day trade, which start and end in less than 24 hours, the rate is 20%.
On the other hand, sales of shares totaling R $ 20 thousand in the period of one month have IR exemption for individuals.
How brokerage works
In general, brokerage deals with investments made in the variable income market, but the way it is charged differs according to the type of asset. Check out more details below.
O future contract it is a purchase and sale commitment between two investors scheduled for a date after the closing of the agreement.
This type of operation is very common in commodity trading in the Futures Market, such as the dollar, coffee, corn and financial indexes, among others.
The brokerage fee for futures contracts varies between different types of businesses, but in most cases the amount charged is for each contract operated.
For negotiations of actions in day trade, that is, which are finalized on the same day, the brokerage is applied by purchase order. However, this is not a rule: some brokers prefer to charge this amount on the number of transactions carried out.
It is also common practice to establish proportional fees according to the financial volume invested. For example: if the investor trades up to R $ 1,000 in shares on the day, the brokerage is R $ 10, but if the amount is higher, the fee becomes R $ 8.
Despite the name, brokerage is not exclusive to securities brokers: many banks also charge this fee by intermediating trades in variable income assets.
However, investing through banks is not a recommended practice, as the value of brokerage is usually much higher. In addition, you can find other costs that do not exist in the brokerage firms, further increasing the loss.
Another negative point is the little variety of investment products, which greatly limits the options available. Therefore, although large banks seem to be good options because they enjoy prestige in the market, they always prefer to make their investments through a broker.
Now that you know what brokerage is and how this rate works, you are ready to choose your investment broker in a more conscious way!
However, do not stick to just that: study the types of applications and the other costs involved, to build a profitable and efficient portfolio.
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