The Annual Cost of a Small Portfolio

The full running cost of a straightforward arrangement: monthly purchases by bank transfer, quarterly withdrawal to self-custody, no trading.

The recurring lines

Deposit. Zero by bank transfer on most venues.

Execution. Twelve purchases a year. Using a limit order on the order book, the maker fee applies and spread is avoided.

Withdrawal. Four per year. A fixed charge per withdrawal on most venues, which means the cost is independent of the amount.

Network fees. Occasional on-chain activity beyond withdrawals. For a pure holder, close to zero.

The one-off lines, amortised

Hardware wallet. A device lasting five years or more.

Backup materials. Paper is free; steel is a modest one-off.

The structure of the result

The fixed costs dominate at small portfolio sizes and become negligible at larger ones.

Execution cost scales with contribution size, so it stays a roughly constant percentage.

Withdrawal cost is fixed per withdrawal, which means it is a large percentage for someone contributing small amounts and a trivial one for someone contributing more.

The implication

For a small portfolio, the withdrawal frequency is the dominant decision. Withdrawing monthly rather than quarterly triples the largest cost line for no benefit.

For a larger portfolio, withdrawal frequency stops mattering and the execution method matters more.

For everyone, the deposit method matters most of all: card versus bank transfer is a difference of several percent on every purchase, which dwarfs every other line.

The comparison worth making

Against a fund charging a management fee on the whole balance annually.

Transaction-based costs are front-loaded relative to holdings: they scale with activity rather than with the amount held. A management fee scales with the amount held regardless of activity.

So the fund is cheaper for someone contributing frequently and holding little; self-custody is cheaper for someone holding a lot and transacting rarely.

The crossover for a typical arrangement falls at a level most people reach within a few years of regular contributions, which is a reasonable argument for learning the self-custody process early rather than late.

What to check annually

Your venue’s fee schedule, in case it changed. Your withdrawal frequency. Your deposit method.

Those three determine almost the entire cost, and platforms publishing a complete schedule without requiring login, such as an exchange with a published withdrawal schedule, make the annual check a five-minute exercise.

The finding worth repeating

In every arrangement we have costed, the largest avoidable line was the deposit method, and the second largest was withdrawal frequency.

Neither is the number that platforms advertise, and neither requires any sophistication to fix.