Beware of Fees!

A while back I thought it would be a good idea to start a DRIP (Dividend Re-Investment Program) and purchase Exxon Mobil directly thru the company (via ComputerShares.com).  This program allowed me to DCA (Dolllar-Cost Average) using as little as $25, with no up-front transaction fees, and require very little upfront funds.  Sounds great right?  Where do I sign up?!?  What I didn’t do (not sure why) is read the fine print.  Fees, boy are there fees!  After realizing this, I told my wife, boy that was a stupid mistake, I never looked at the fee schedule.

Well I just closed out the position with Exxon and I felt like I was back in London with my former co-worker as he attempted to exchange $20 US for British Pounds (not sure why he only wanted to convert $20USD) at the Heathrow Airport exchange.  “Well sir, after conversion you’ll receive a sum of $3 GPB.”  He couldn’t even take the Tube to St Paul stop (where we were going)!  Now the conversion rate at the time was almost 2:1, so the math didn’t add up…until you factored in the fees.  Coming back to the DRIP, the same thing happened to me.  Fees for this and that and then a 28% tax withholding; I maybe broke even with this position, but after fees and the tax withholding, I would have been better off just keeping the position there…forever!

Now what did I learn from this?  Read all fees pertaining to an investment (I usually do, not sure why I didn’t here).  Looking at it now, I could have easily setup an automatic investment plan at ING Sharebuilder and would have had a better experience.  Or better yet, don’t DCA an individual stock, rather next time choose a fund or index.  Live and learn!