Which term refers to the costs associated with purchasing an investment that are not directly paid for by the investor?

The term that refers to the costs associated with purchasing an investment that are not directly paid for by the investor is "transaction costs." Transaction costs encompass the expenses incurred during the buying and selling of securities, which could include brokerage fees, fees for executing trades, and the bid-ask spread. While these costs may not be handed over directly as a separate charge to the investor, they can significantly impact the overall return on the investment.

Investors should be aware that transaction costs can erode profits over time, especially if trading frequently or investing in assets with high fees. Understanding these costs is crucial for evaluating the net profitability of an investment and making informed financial decisions.

The other terms mentioned, such as net returns, indirect costs, and opportunity costs, pertain to different aspects of investment risks and returns. Net returns refer to the actual profit one makes after all costs and expenses, indirect costs might include expenses like taxes that aren't directly related to the transaction itself, and opportunity costs represent the value of the next best alternative that is foregone when a financial decision is made. None of those terms capture the specific nature of costs incurred during the transaction itself like "transaction costs" does.