Cost Of Carry

DEFINITION of 'Cost Of Carry'

Costs incurred as a result of an investment position. These costs can include financial costs, such as the interest costs on bonds, interest expenses on margin accounts and interest on loans used to purchase a security, and economic costs, such as the opportunity costs associated with taking the initial position.

BREAKING DOWN 'Cost Of Carry'

Cost to carry may not be an extremely high financial cost if it is effectively managed. For example, the longer a position is made on margin, the more interest payments will need to be made on the account. When making an informed investment decision consideration must be given to all of the potential costs associated with taking that position.

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