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Simple English definitions for legal terms
soft dollars
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A quick definition of soft dollars:
Soft dollars are credits that brokers give to their clients for doing business with them in the stock-trading industry. It's like a reward for being a loyal customer. Additionally, it's a portion of an equity investment that can be deducted from taxes in the first year. This is different from hard dollars, which are not tax-deductible.
A more thorough explanation:
Definition: Soft dollars are credits that brokers give their clients in exchange for the clients' stock-trading business. These credits can be used to pay for research, data, or other services that the broker provides to the client.
For example, if a client trades a certain amount of stock through a broker, the broker may offer them soft dollars that can be used to pay for research reports or other services that the client needs. These soft dollars are not actual currency, but rather a form of credit that can be used to pay for certain expenses.
Soft dollars are different from hard dollars, which are actual currency that is paid to a broker for their services. Soft dollars are often used in the securities industry to incentivize clients to do business with a particular broker, and they can be a valuable tool for investors who need access to research or other services.