Fx fees take a sum

Im a noob here and first time buying and selling shares. I managed to make a profit of 150gbp with one trade but the fx fee for buying and then selling add upto 45gbp…now my profit is only 105gbp.isnt that a huge percentage of the profit. What about witholding tax in the usa or capital gains tax in uk?. How do you make money on here without paying a a huge amount when im taking the risk?.
Any other competitors that dont use fx fees and just pay an amount to buy the trade?. Which is cheaper any help would be appreciated.

As a % of the profit yes but you can’t measure it on profit alone, what’s your trade value?

2 Likes

Hey,

Thanks for the reply,

Here you go

1 Like

The fees are in here. It’s spot rate conversion + 0.45% FX fee.

If you’re following a long term investment strategy then FX fees are immaterial long term, although worth minimising where you can.

If your strategy is to trade short term then maybe best to look at having an account in USD.

3 Likes

Sebreitz
Already read that was just looking for some local knowledge from regulars…thanks

Tinvest
I have long term in vuag and vwrp… this is my play cash… what are your strategies if i may ask.

An account in usd?

Certain brokers (I don’t know if Freetrade is one) allow you to have general investment accounts in different currencies, note an ISA needs to be in GBP. But if you’re trading then you could have a USD account, pay FX fees once then do multiple trades in USD with no FX fee. It isn’t really my thing so can’t make specific recommendations, but look into it.

In the past (going back 10-15 years) I was quite scattergun with no strategy. I’ve learnt a lot in the last 2 years. Strategy is long term, buy, dollar/pound average, hold - with the odd short term hedge if I find my portfolio unbalanced.

Portfolio is made up:

  • 50% pension (which is largely VWRP type stuff)
  • 50% personal investments (80% of which is spread across c50 individual stocks - mostly large household names, remaining 20% is split between All World Trackers e.g. VRWP/L, S&P 500 e.g. VUSA/VUAG, and a bit Japan, Pacific, Emerging Market funds)

Edit: If I can prove to myself that the individual stocks are better than the pension/trackers then I’ll move that into the stocks. One step at a time though

1 Like

I personally invest some in USD that I hold for the longer term and then have more gbp denominated assets in the isa that you don’t pay fx fee for. Some of the USD funds have a similar gbp equivalent.

1 Like

The FX is on the full proceeds. Obviously brokers need to make money somewhere. If you are looking for a better FX rate then look at (for example):

A general investment account can be held in a variety of currencies with some brokers but most only do £ accounts. Some brokers have multi currency accounts. FX commissions of course vary. Easy to open up a US dollar account with a US firm such as Charles Schwab. Shop around to find what suits you.

When it comes to a ISA … this must be held in £s (HMRC rules).

2 Likes

Tinvest
This was the information i needed and i believe most people new to brokers would find this more than helpful instead of reading it from a source. The usd dollar account is what i need then, just have to dmor.
You have your vwrp in a pension so you get the government contribution… added with compound interest and time. The only downside is the restriction is you cant use it till 50ish?.

Wulfy
Nice, i didnt think of that yet, uk holdings in isa so no fx fee, and usa holdings/stocks in usd dollar account and long term holds. Ive mostly just kept my etfs in the isa and my gia is for every currency stock.
Im playing in the gia until i have made some money ontop of wages and thinking of investing it into another isa on vanguardinvestor. Not sure about having all my savings in one broker.

Bitflip
Thanks for clearing that up for me full proceeds. I have seen many forum posts about charles schwab and i might try that one. Ill just send a large sum and have one fx fee payment, then trading in usd on stocks will have no fx fees cause no currency conversion. Once ive finished playing in usd i will have to pay another fx fee to get it back into gbp. Just getting to grips with it all.

In future i think ill open a sipp and somehow move my etfs in the isas to it, if thats possible.
Seems like i have fomo for those govt contributions.

1 Like