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How to Minimize Investment Fees and Expenses

When investing in Indian stock markets, there are several types of fees and expenses that you may encounter. 

For example, there is 

One-time fees & expenses, like account opening, brokerage and STT charges – Recurring expenses, like AMC charges and expense ratio 

The specific fees and expenses can vary among different brokerage firms, depository participants, mutual fund companies, and other service providers. Therefore, it’s crucial to carefully review the fee structures and terms of service before investing to understand the applicable charges. 

Here are some common investing fees & expenses – 

1. Brokerage charges: are fees charged by brokerage firms for executing your buy or sell orders in the stock market. These charges can be a percentage of the transaction value or a fixed fee per trade. 

For example, Zerodha charges a flat Rs. 20 per trade. In comparison to which ICICI Direct charges 0.50% of the transaction value in brokerage charges. 

To minimize brokerage charges – choose a discount broker like Zerodha or Upstox if you are a beginner and looking to earn money from the stock market without spending too much on brokerage charges. 

The brokerage charges can vary across different brokerage firms, so it’s important to compare and choose a brokerage that offers competitive rates. 

2. Account Opening Charges – account opening charges are collected only by Zerodha and SBI Cap Securities. All other brokers in the list of top 20 stockbrokers provide free account opening services. 

To minimize account opening charges – you can pick any other broker apart from Zerodha and SBI Cap Securities. 

3. AMC Charges – are collected by your DP for maintaining your demat account. 

When you hold shares in a dematerialized (demat) form, you need to maintain a Demat account with a depository participant (DP). 

The DP may charge annual maintenance fees or transaction fees for crediting or debiting shares from your demat account. AMC charges range from Rs. 200 to Rs. 1000 per year.

But as per the InvestingExpert top stockbroker report 2023, 4 stockbrokers – Upstox, Paytm, Groww and Paytm offer free AMC. 

To minimize AMC charges – you can select a stockbroker that offers free AMC. 

4. Expense ratio – is a measure of the annual costs associated with investing in a mutual fund. It represents the percentage of a fund’s assets that is used to cover the fund’s operating expenses. 

Mutual fund expenses include management fees, administrative fees, legal fees, marketing expenses, and other costs incurred by the fund. 

The expense ratio is expressed as a percentage of the fund’s average net assets. 

So if a fund has an expense ratio of 1%, that means that the fund’s expenses for the year are equal to 1% of the fund’s average net assets for the year. 

To minimize expense ratio charges – you can select a mutual fund scheme with a lower expense ratio. 

Other Investment Fees & Expenses 

1. Securities Transaction Tax (STT): STT is a tax levied on the purchase and sale of securities in the Indian stock market. 

The rates vary depending on the type of transaction, such as equity delivery trades, equity intraday trades, and options and futures trades. The STT is typically a small percentage of the transaction value. 

STT is fixed and can’t be minimized. 

2. Exchange transaction charges: Stock exchanges in India charge transaction fees for executing trades on their platforms. 

Exchange transaction charges are generally based on a percentage of the transaction value and are payable by both buyers and sellers. The transaction charges can vary depending on the exchange and the type of security being traded. 

You cannot reduce exchange transaction charges because it is fixed by the respective exchange. 

3. Demat transaction charges: When you transfer shares from one demat account to another, demat transaction charges may apply.

These charges are levied by the depository and can vary depending on the quantity of shares being transferred. And are mostly fixed. 

4. Mutual fund Investment: If you invest in mutual funds through your agent or using some advisor chances are that he may suggest a “Regular Mutual Fund Scheme”. 

Investing in a regular mutual fund is costly because a certain percentage of commission is paid as distribution fees to your advisor which is borne by you as a part of the investment cost. 

Use the “Direct Mutual fund investment scheme” which will be cheaper than the regular mutual fund investment. Here you are investing directly with the mutual fund house without any assistance of the advisor. 

Online platforms like – Zerodha Coin and Scripbox help you invest in direct mutual fund schemes at no additional costs. 

5. Advisory or portfolio management fees: If you utilize the services of a financial advisor or portfolio manager, they may charge advisory fees or portfolio management fees. 

These fees are typically a percentage of your assets under management or a fixed fee for the services provided. 

Advisory fees can be saved if you like to do your own research and have time to do so. But if you don’t have the time and don’t want to put effort into researching them paying a small amount in advisory fees will save you a lot of headaches. 


As a cost-conscious investor, your aim is to build a sizeable portfolio at the least cost possible. 

In the beginning, when your focus is on learning about stock investment you should consider opening an account with a discount broker and spending time to understand different strategies. 

After having 3-6 months of experience, once you are ready to invest then you should look to minimize investment costs. When you do then you should not look at the individual cost head. 

But it’s advisable to consider the overall costs in relation to the investment performance, services provided, and your investment goals to make informed decisions.