Stock market trading – Even if an investor has capital enough to buy many times one share in each of fifty or more companies, he still takes on a lot of work in selecting and keeping track of so many companies, and in handling his certificates and divi dends.

Another advantage of having considerable capital in one pool is that the fund can afford to pay the salaries of a competent manager and assistants. Aside from the sales charge, most of the expense incurred in a typical investment company is the fee paid to the group responsible for keeping the fund invested. Usually this fee is fixed at a rate equivalent to 1/2 of 1 per cent of the fund's assets each year. Suppose a fund's capital is $25 million; 0.5 per cent of this is $125,000, which the fund can pay for an investment manager, his assistants, and his expenses. A fund far smaller than this may be able to hire a skilled manager, because he expects a rapid growth of the fund's assets, and consequently of his management fee.

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