🚨 Fees and Taxes, Small Differences Change Your Returns!

Day 008 | US Stock Investment Guide for Beginners | 2025.12.21

📌 Fees and Taxes - Small Differences Change Your Returns!

💬 In US stock investing, fees and taxes have a big impact on your returns. Understanding and managing these costs before trading can help you maximize profits in the long run.

US stocks have different fee and tax structures compared to domestic stocks. Understanding these costs and creating strategies to reduce them is key to successful investment management.

1️⃣ Terms and Background

The main costs in US stock investing are divided into fees and taxes.

• Fees: Costs charged by brokerages when you trade. You pay them when you buy and when you sell.
• Taxes: Include dividend income tax and capital gains tax.

① Fees

• Most domestic brokerages charge about 0.25%~0.5% in fees for US stock trades.
• Currency exchange fees also apply, but you can reduce these by using exchange rate benefits.

② Taxes

• Dividend Income Tax: 15% of dividends is withheld by the US government.
• Capital Gains Tax: If your annual profit exceeds 2.5 million won, you pay 22% tax (including local tax) on the excess amount.

Fees and taxes may seem like small differences, but over time they add up and greatly affect your returns. It's important to understand and manage them in advance.

2️⃣ Investment Principles and Key Guidelines

To manage fees and taxes effectively, follow these principles:

• Reduce Trading Frequency: Cut down on unnecessary buying and selling to save on fees.
• Use Exchange Rate Benefits: Make full use of exchange rate benefits offered by brokerages.
• Understand Tax Structure: Calculate dividend and capital gains taxes to estimate your expected returns.
• Long-term Investing: Holding investments long-term rather than short-term trading helps reduce tax and fee burdens.

3️⃣ Specific Action Strategies

Action Strategies

1. Compare Trading Fees
   • Compare US stock trading fees across brokerages and choose the most favorable one.
   • Some brokerages offer fee discounts to new customers for a certain period.
2. Use Exchange Rate Benefits
   • If you need to exchange currency often, choose a brokerage with high exchange rate benefits or take advantage of special events.
   • Adjust your exchange timing to minimize costs from exchange rate changes.
3. Tax Saving Strategies
   • Profits under 2.5 million won per year are not subject to capital gains tax, so consider this when timing your sales.
   • Reinvest dividend income to enjoy compound effects in the long run.
4. Use ETFs
   • Using ETFs with stable dividends and returns compared to individual stocks reduces dividend income tax burden.
   • Choose cost-efficient ETFs to reduce management costs.
5. Long-term Holding and Diversification
   • Hold quality stocks long-term while reducing trading frequency and cutting costs.
   • Build a portfolio that diversifies across sectors and regions to minimize tax burden.

4️⃣ Q & A

Q1. How can I find brokerages with low fees?

A: You can compare fees among major domestic brokerages or get benefits through new customer events.

Q2. Is there a way to reduce dividend income tax?

A: Dividends are withheld at source so you can't reduce the tax, but reinvesting dividend income can offset the tax burden in the long run.

Q3. Do I need to file taxes separately?

A: Dividend income tax is withheld by the US, but you must personally report capital gains tax at the end of the year.

Understanding and managing fees and taxes is a key strategy for increasing returns. Small cost differences have big effects in the long run, so create better results through smart investment management.

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