Marginal tax rate
The percentage of tax paid on each additional unit of income above your current bracket. In a progressive system, your marginal rate is always greater than or equal to your effective rate. People often confuse the two and assume they pay 37% on everything when they only pay 37% on the income that falls in the top bracket.
If your top bracket is 30%, earning €100 more brings home €70, but your overall effective rate stays much lower than 30%.
The silent subtractors
Fee
A charge taken from your investment by a fund, broker, or advisor, every year, forever.
Read →Tax
The other silent subtractor. Almost every gain you make is taxed somewhere.
Read →Expense ratio
The annual fee a fund charges, expressed as a percentage of your investment.
Read →Commission
A fee charged by a broker each time you buy or sell. Mostly $0 with modern brokers.
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