In order to purchase stocks, you need a brokerage account.
Australian Stocks
Australian stocks are traded on the Australian Securities Exchange (ASX). Most big banks offer a brokerage account but there are a few other companies as well who may offer more competitive fees.
Commsec
Commsec is owned by CBA and while they don’t have competitive fees, they have one competitive edge over the competition: Their T+2 settlement method allows you to purchase stocks without having funds in the account. Funds are only required on settlement, two days after the transaction which means you can keep your money in an interest earning savings account until the day you need it. Their app is also subjectively the best.
The main downside of the account is the brokerage fee which can be seen here. As of writing (15 May 2021), the fees are:
- $10.00 for trades up to and including $1,000
- $19.95 for trades over $1,000 up to and including $10,000
- $29.95 for trades over $10,000 up to and including $25,000
- 0.12% for trades over $25,000
Selfwealth
Selfwealth‘s biggest advantage is simple: they have the lowest fees at a flat fee of $9.50 for all trades, regardless of size. Using a referral code or referring someone else also gives you 5 fee-free trades to use within 30 days.
My biggest gripe is that there is no way of instantly funding the account and the fastest way to fund the account is via BPAY which takes 1 – 3 business days. This means you either have to wait to fund the account when you need it or you pre-fund it and let it sit in the account without accumulating interest.
Selfwealth also provides $0 brokerage when purchasing their ETF but charge their standard $9.50 fee when selling.
Superhero
Superhero is a bit different from the other options as they don’t give you an individual HIN. Instead, they bundle their users together with one HIN which allows them to bundle their user’s trades as well and offer lower brokerage trades at $5 per trade. They also support OSKO payments so you only need to transfer to it from your bank account when you want to make a trade. In addition to this, they also have a $0 brokerage fee for all ETF purchases and just charge their standard $5 fee when selling.
The HIN structure also allows for $100 minimum trades however I wouldn’t recommend it as it’s not very fee efficient unless you’re just buying ETFs. Other negatives with Superhero are that due to the lack of an individual HIN, it’s a bit messy to transfer stocks to another broker (seems to cost $27.50) and the free account only supports market orders and not limit orders.
US Stocks
The US has a few more exchanges (biggest are NYSE and NASDAQ) as well as broker choices than we do here, however there are just a few that we have access to in Australia. I can’t speak too much on US markets from experience but I’m aware of Selfwealth offering flat $9.50 USD fees per trade and a 0.6% spread on currency exchange which seems really uncompetitive as there are some brokerage free options available.
Some of the big fee-free options are:
- eToro
- IG
- CMC Markets
- Stake
Finder has a good page on How to invest in US stocks from Australia.
What I’ve found is that the currency conversion fees are a major loss factor with all of these. See the page on Payment Accounts for more information on minimising loss from international transactions.