When it comes to investing in ASX shares, most investors would have a fair idea of the costs involved. Buying and selling ASX shares isn't free, but brokerage costs have been on a downward trend for the past decade or so.
These days, it certainly doesn't break the bank if you want to start a share portfolio of your own – especially when you compare the costs of shares against the massive frictional costs that are involved with property investing.
And yet, the costs associated with investing and buying ASX shares apparently remain a large concern for Australians who would like to begin their investing journey but haven't pulled the trigger just yet.
The ASX itself has just released its Australian Investor Study 2023, and it makes for some interesting reading.
According to this comprehensive report, there are eight million Australians who have never invested outside their family home and superannuation accounts. When surveyed, these investors listed a number of reasons why they have not shown an interest in investing.
By far the largest reason was 'Don't have enough money to invest', according to 43% of those surveyed. Other reasons included: 'Not confident I can make the best decision (27%)', 'Don't know which investments to start with (19%)', and 'Don't know where to find the right information (18%)'.
Some of those surveyed indicated costs were an issue, with 14% of respondents agreeing with the phrase 'It costs a lot to begin investing (e.g. transaction fees)'.
Is buying ASX shares expensive?
That is concerning, as brokerage costs are certainly not what they used to be. Gone are the days when you would need to engage your own personal (and expensive) stockbroker or financial advisor in order to buy and sell shares. Many ASX brokerage services now offer investing services for under $10 a trade. Some even offer trades for $3 a pop or less.
For example, broker Stake charges just $3 for all trades up to $30,000 each, or US$3 for American shares. Fellow broker Superhero charges $5 a trade, makes buying exchange-traded fund (ETF) units free, and charges nothing for trading American shares.
The brokerage services offered by the big banks, such as Commonwealth Bank of Australia (ASX: CBA)'s CommSec, tend to be a little more pricey. But even CommSec's $20 per trade (for trades up to $10,000) isn't too burdensome.
If you're dropping $5,000 on an ASX share, then a $20 ticket clip probably shouldn't bother you too much.
Of course, finding the money to invest in ASX shares isn't easy. We all have bills to pay and roofs to put over our heads, which doesn't seem to be getting easier lately. But if you have the cash to invest in ASX shares, then the transaction costs that you are being asked to pay in our modern era shouldn't bother you too much.
