When investing in the common shares of individual public companies you will have a cost to buy and a cost to sell the shares.
Note: There are no additional annual costs associated with common shares unless you hold these shares within an account that charges an annual management/service fee.
What is the cost to purchase common shares?
The cost to purchase these shares will be dictated by the location of your investment account. Discount brokerage firms are the least expensive place to buy and sell shares while full service investment firms are the most expensive. For example, the commission to purchase or sell 1,000 units, at a price of $10.00, can range from $9.95 if purchased through a discount broker, to $250.00 at a full service broker.
The cost to purchase and sell shares will be influenced by the number of shares involved, the share's price, and the financial institution’s commission schedule. In some instances, the value of your account and the trading frequency may also influence the transaction costs. Some discount brokers will offer discounts if your account value exceeds a certain dollar value and if you maintain a certain level of trading activity.
What is the cost to purchase an Initial Public Offering (IPO)?
If you are able to purchase common shares as an IPO (commonly referred to as a new issue), then there is no direct commission cost. When you purchase shares from an IPO, you are buying shares directly from the issuing company. You are not buying shares that were previously issued and trading in the stock market.
The financial institution and its retail representatives that sell IPO shares to investors are paid a commission by the issuing company for marketing and distributing the shares to the public.
Note: For more information about common shares, see our section Classroom–Investment Type: Common Shares.