Costs of Investing:
A Breakdown

It's not always easy to get a handle on your investing costs. Depending on where you invest, it might be difficult to get a good understanding of what the costs are and what investors might expect to pay for them. We believe it shouldn't be that way. You should always know what you’re paying—and finding that information should be easy.

Stocks and Options

What are the costs? What you pay with Schwab
Trade Commissions 
Every time you buy or sell a stock or option, your brokerage company may charge you a trade commission. This includes costs for routing, executing, and clearing the trade. 
US$0 commissions on online listed stock and options trades.1 
US$0.65 per options contract.2

stocks and options disclosure

1. Standard online US$0 commission does not apply to over-the-counter (OTC) equities, transaction-fee mutual funds, futures, fixed-income investments, or trades placed directly on a foreign exchange or in the Canadian market. Options trades will be subject to the standard US$0.65 per-contract fee. Service charges apply for trades placed through a broker (US$25) or by automated phone (US$5). Please contact Schwab for details. See the Charles Schwab Pricing Guide for Individual Investors for full fee and commission schedules.

 

2. Please see the Charles Schwab Pricing Guide for detailed information on equity and options commissions. Multiple-leg options strategies will involve multiple commissions.

Multiple leg online option orders such as spreads, straddles, combinations, and rollouts are charged per-contract fees for the total number of option contracts. Complex online option orders involving both an equity and an option leg, including Buy/Writes or Write/Unwinds, are charged per-contract fees for the option leg. Service charges apply for trades placed through a broker (US$25).

Special Service Fees
Exchange Process Fee - This is a fee Schwab charges to offset fees imposed on us directly or indirectly by national securities exchanges, self-regulatory organizations, or U.S. option exchanges. Schwab shall have the right to determine the amount of such fees it charges in its reasonable discretion, and such fees may differ from or exceed the actual third-party fees properly paid by Schwab in connection with any transaction. These differences may be caused by various internal and external factors, including, among other things, the rounding methodology used, the use of allocation accounts, transactions or settlement movements for which a fee may not be assessed, timing differences in changes, third-party rate caps and floors, calculation errors, and various other anomalous reasons.

The Securities and Exchange Commission (SEC) assesses transaction fees on national securities exchanges and self-regulatory organizations based on the aggregate dollar amount of sales of certain securities. The SEC recalculates the amount of this fee periodically – at least once per year but sometimes more often. National securities and self-regulatory organizations offset the transaction fees by charging their member broker-dealers such as Schwab, and Schwab, in turn, offsets this fee by charging you an Exchange Process Fee for covered sell transactions.
 
U.S. option exchanges charge Schwab the other broker-dealers per-contract fees for purchases and sales of exchange-listed options. The exchanges may charge these fees even on transactions executed on other exchanges, which can result in multiple fees being imposed on Schwab for a single transaction. Schwab offsets these fees by charging you a single Exchange Process Fee for each covered transaction. Any Exchange Process Fee that appears on your trade confirmation for a sale of an exchange-listed option combines the offsets for the fees charged by the U.S. option exchanges, national securities exchanges, and self-regulatory organizations. 

Schwab's Exchange Process Fee will rise or fall periodically depending upon the rates set by the SEC, self-regulatory organizations, or by the U.S. option exchanges, as applicable. 

Exchange Process Fee for American Depository Receipts (ADR) – This is a fee Schwab charges to offset fees imposed on Schwab by executing brokers. It is associated with transaction taxes assessed by certain governments as a percentage of the purchase amount of certain securities, and the rate is subject to change. The fee will appear as an "Exchange Process Fee" on your trade confirmation. 

Offshore Mutual Funds

What are the costs? What you pay with Schwab
Operating Expense Ratio (OER)
OERs are charged annually by the fund company, expressed as a percentage of a fund's average net assets. They cover the fund's management and other costs. 

Passively managed funds are designed to track a specific market index and typically have lower costs (OERs) than actively managed funds that pay fund managers or management teams to make ongoing decisions on where a fund's money is invested.
OERs vary from fund to fund.    
Load
When you purchase or redeem shares in certain load-based offshore mutual funds, some fund companies charge you this one-time commission to compensate the broker for the sale.
US$0 Schwab waives sales loads charged by fund companies.
Transaction Fee
When you purchase or redeem an offshore mutual fund, your brokerage company may charge you a trade fee. This fee may also be used to compensate the brokerage in instances where it does not receive compensation from the fund.
US$0 No transaction fee is charged at Schwab  

See disclosures on Offshore Mutual Funds

3. Per-trade transaction fees do not exceed 8.5% of principal. Trades below $100 in principal are exempt from the transaction fee. For information about offshore funds (funds registered outside the U.S. for purchase by non-U.S. persons only), please call us.   
 

Exchange-traded Funds (ETFs)

What are the costs? What you pay with Schwab
Operating Expense Ratio (OER) 
OERs are charged annually by the fund company, expressed as a percentage of a fund's average net assets. They cover the fund's management and other costs. 

Passively managed funds are designed to track a specific market index and typically have lower costs (OERs) than actively managed funds that pay fund managers or management teams to make ongoing decisions on where a fund's money is invested.
Passively managed ETFs 

Schwab ETFs™*3 Expenses can range from 0.03%-0.39%*. 

Third-party passively managed ETFs traded on US exchanges are also available. OERs vary from fund to fund.

Actively managed ETFs
Schwab offers third-party actively managed ETFs traded on U.S exchanges. OERs vary from fund to fund. 
Trade Commission (online)
Your broker may charge you a trade commission each time you buy or sell an ETF.
US$0 online for any listed ETFs, including Schwab ETFs4
Other Costs 
Bid/ask spreads and changes in discounts and premiums can also factor into your trade costs. 
Costs vary from fund to fund.

*Source: CSIM. As of October 31, 2021.

ETFs disclosure

4. Charles Schwab Investment Management, Inc. (CSIM), is the investment advisor for Schwab ETFs. Schwab ETFs are distributed by SEI Investments Distribution Co. (SIDCO). SIDCO is not affiliated with CSIM.

 

5. ETFs at Charles Schwab & Co., Inc. ("Schwab") which are U.S. exchange-listed can be traded without a commission on buy and sell transactions made online in a Schwab account. Unlisted ETFs are subject to a commission. Please see pricing guide for additional information. Schwab does not receive payment to promote any particular ETF to its customers. Schwab's affiliate Charles Schwab Investment Management, Inc. ("CSIM") serves as investment advisor to the Schwab ETFs, which compensate CSIM out of the applicable operating expense ratios. The amount of the fees is disclosed in the prospectus of each ETF.

Bonds

What are the costs? What you pay with Schwab
Price Markup 
Generally, this is the difference between the market price of the bond and the price at which it's sold to you, including transaction fees.
US$1 per bond transaction fee for most secondary market bonds traded online (US$10 minimum/US$250 maximum).5

Bonds disclosure

6. Broker-assisted trades: Online pricing + US$25 per trade service charge

 

Schwab reserves the right to act as principal on any fixed income transaction, public offering or securities transaction. When Schwab acts as principal, the bond price includes our transaction fee and may also include a markup that reflects the bid-ask spread and is not subject to a minimum or maximum. When trading as principal, Schwab may also be holding the security in its own account prior to selling it to you and, therefore, may make (or lose) money depending on whether the price of the security has risen or fallen while Schwab has held it. When Schwab acts as agent, a commission will be charged on the transaction.


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