What is a Stockbroker? How to Invest in the Stock Market

Are you wanting to start investing in shares, wondering what is a stockbroker? Or overwhelmed working out which stockbroker is best?

Before investing in the Stock market you should have:

Paid off any bad debts – You won’t outperform the interest rates on bad debt. Find out what are good debts, bad debts and what’s the difference.

Worked out your goals

Decided on a broad wealth building strategy

Made a financial plan.

Have cash available in case of emergency

You should then know:

  • How long you have to invest before you want to start withdrawing
  • How much cash you have to invest and how often
  • Whether you are aiming for capital gains, dividend income or total return
  • Understand your risk tolerance
  • Whether you plan to use an active or passive strategy, or a core and satellite approach
What is a stockbroker?

How to Start Investing in shares:

What Are Shares?

Shares are sometimes known as stocks or equities, these all mean the same thing. Shares are an easy way to benefit from partial ownership of businesses. Businesses are divided into many “shares” for sale to investors.

The businesses get an injection of cash, the investors get to benefit from the profits (or not) from the business as long as they own the shares.

IPOs

Companies “float” on the stock exchange in order to raise money, often to fund business expansion. This is known as an Initial Public Offering (IPO).

It’s challenging to pick the few of many IPOs that are not overpriced and will provide good returns over the long term.

IPOs can be accessed through your stock broker, sometimes from the company directly or via online platforms that often allow fractional ownership (Investing with small amounts of money from each investor).

Purchasing Shares on the ASX

The secondary market is where most people buy shares. Shares are brought and sold via the Australian stock exchange (ASX). What is a stock broker’s role? A stock broker coordinates the buying and selling of shares on the ASX.

The price of each share is set by the continuous balance between supply and demand of shares available.

If more people are optimistic (Bullish) about a company so want to buy it, the price goes up. If more people are pessimistic (Bearish) about a company and want to sell, the price goes down.

The share prices of individual shares (and the entire stock market) can fluctuate wildly in a day.

Trading on the Stock Market

The whole aim of the game is to buy low, sell high. Sounds simple.

Stock market traders try to do this by buying and selling to make quick profits (often in the same day). The stock market in the short term is extremely unpredictable, “trading” is gambling for most.

Any profits that are made are then taxed at your marginal rate (but offset against losses).

What is a stock broker’s interest in trading? Each time you buy or sell investments, the stock broker is paid a brokerage fee. Many platforms encourage active trading, as it makes a greater profit for the stockbroking platform.

Picking Stocks

Share prices of individual companies can fall to zero. Even companies “Too big to fail” sometimes go broke. You could lose all of your investment if you choose a company that completely collapses.

It is common for professionals who have excelled in their field to assume their brilliance extends into the world of finance. Even Warren Buffett suggests passive index fund investing.

How to Make Money on the Stock Market

It’s no secret that you make money on the stock market by buying low, and selling high. The stock market as a whole has increased in value consistently over time. It should be easy to buy low, and sell high several decades later.

Stock market volatility (along with lots of media hype) is powerful in whipping up storms of greed and fear.

Our emotions often lead us to buy high (not wanting to miss out) and sell high.

What are the Benefits of Investing in the Stock Market?

Owning a business has potential for creating limitless income (think inventing the next Amazon).

But starting your own business also involves huge amounts of risk, and results in your assets vulnerable due to concentration risk (all your eggs in one basket). Doctors, in particular, are known for often doing poorly when starting businesses.

The benefit of share ownership is that you can own a tiny part of thousands of businesses, all over the world with a few clicks!

How to Start Investing in Shares: What are the risks?

Volatility

For the uninitiated, investing in the stock market often seems akin to gambling. Prices rise and drop in seemingly random and dramatic patterns.

The thought of putting your own hard earned cash into an investment that could halve in value tomorrow is unappealing.

Humans have a tendency to focus on the short term. Historically the best investors are those that have died, followed by those that forgot about their investments!

You need to forget about your investments, and set yourself a reminder to check them in a decade!

Risk vs Volatility

Financial literature talks a lot about risk tolerance. The idea being that some people are innately more risk tolerant (aggressive) that others. Robo- and financial advisors ask a series of questions to ascertain your risk tolerance and base your investment recommendations on that.

The general idea in investing is that to get a bigger return, you have to take on more risk. Investing in more index funds vs bonds in your portfolio is associated with higher risk (actually volatility) but over the long term should deliver higher returns.

Volatility is often referred to as risk in financial literature. I think of them separately. Risk to me is potential to lose your capital. Volatility is the bouncing around of your investment value, and potential sleepless nights from losing money on paper (unless you sell!)

Investing in a single investment or stock (e.g. Myers) that could go bust involves risk. Investing in a broad, passive index (e.g. VAS), involves minimal risk of losing all your capital. It can however involve a lot of volatility. If you sell at the wrong time, you can lose a lot of money.

Risk Tolerance

High risk investments should not be taken on by those who cannot afford to lose their money.

A couple I know received a significant inheritance, but already in their 60s had little time for compound growth. They were seduced by a commercial property development deal (through their own builder-renovator) with a promised return of 15%. The couple, with no previous investing experience, invested (and lost) the lot.

Another retiree withdrew his entire superannuation to invest in a franchise. It was far harder to make a profit than he thought. The business went bust, now he is living off the aged pension alone.

Always consider risk first. Be very careful trying to make up for lost time by chasing investments with higher risk and return. Always understand the risk you are undertaking thoroughly.

Volatility Tolerance

A common error is to overestimate your own volatility tolerance, chasing higher returns in the hope the market continues it’s upward (bull) run forever.

The market always falls. The media scream that the sky is falling, and the world will never be the same. The outcome depends on your behaviour. If you panic and sell, you will lose money. If you can hold your nerve (and even invest more), when the market recovers you will probably be unbearably smug.

Developing Volatility Tolerance

I don’t think volatility tolerance is a set characteristic. The volatility in the market takes some getting used to. On my first exposure to the stock market, I did what many newbies do, panic.

With a couple of thousand invested, I sold when my balance dropped. As a medical student, I had been advised to open the account by a family member. Despite the fact I had no idea what the stock market was about, and needed the money later in the year to eat! I shouldn’t have been invested in the first place!

With repeated exposure over the years, through superannuation, micro-investments and LICs, I have developed more volatility tolerance.

I had to ban myself from logging into my superannuation account in March 2020. However, I did invest more during the downturn, which soon recovered.

This is a huge reason, in my opinion, to start investing before you have decent money to invest with.

Practice and go through the emotional rollercoaster of market ups and downs with a micro-investment account first.

Only by experiencing the volatility with your own savings will you understand your own volatility tolerance (and it may grow with experience).

If you grow a reasonable amount in your micro-investment account, the fees become inefficient. It is then time to withdraw and invest via a stock broker.

How Long Do You Need to Invest in the Stock Market?

Because of the volatility, and short-term unpredictability of the stock market, investing for a period of less than 7-10 years is generally not recommended.

If this is cash you need, and if it fell in value you would still need to withdraw it, don’t invest. Don’t invest your student loan money you need to pay for food later in the year!

It is Never the Right Time to Invest in the Stock Market

In December 2016 the media were warning of an impending crash, and my “financial advisor” (actually insurance salesman) talked about moving investments to cash.

Every professional seemed to think there was a crash about to happen. The returns in the 3 years between these dire warnings and the actual (fairly short lived) crash were impressive.

It feels like swimming against the tide. It’s nerve racking. But someone is always forecasting a crash. If you listen to the constant fear mongering, you may never enter the market.

Most of the time, by delaying investing you are missing out on good returns. Far less often do you succeed in waiting until after the crash.

Even then, what do you do after the crash, when there are still warnings it’s going to drop again (as currently post COVID market recovery).

Have a Strategy for When the Market Does Crash

Markets crash. If you invest in the stock market, you need to accept your investments halve in value sometimes. Having a strategy to handle this will help you get through it without doing anything stupid.

My strategy is simple

  • Don’t log in to check investments while I’m hearing horror stories.
  • Only check in on investments once I hear several announcements of the recovery.
  • If I can earn some more or have spare cash, invest in tranches for every 10% drop (I actually find doing this helps me feel like I’m in control of the situation)

Debt Risk

Aggressive investors may use leverage to augment market returns. Leverage also means you can lose more than your investment.

You are reading an article about how to get started investing in the share market. Margin lending, debt recycling and leveraged ETFs are not for you yet, if ever.

How to Start Investing in Shares: Minimum Investment

The minimum investment in the Australian stock market is $500.

But in order to purchase or sell stocks (or ETFs) , brokerage fees need to be paid.

Brokerage fees are often the same whether you are buying $500 or $10,000 of a stock or ETF. Therefore, buying in parcels of $3000+ is more cost effective.

You can use an investing frequency calculator to decide how often you should invest with the money you have available.

How to Start Investing in Shares: Choosing a Stock Broker

Brokerage Fees

Full service brokers are old school, expensive broker who provide a full service including advice. Brokerage fees of $50 or more are involved in each purchase, so you would need to be confident the broker has adequate expertise and your best interests aligned with his / her own.

Online brokers are what most investors will use, and are certainly more cost effective for passive investing strategies.

Different brokers use different fee structures. Don’t be fooled by the ad claiming “Brokerage fee” trading. Brokerage fee does not mean fee free. All these companies need to make a profit. Compare the fee structures carefully to decide what is the most cost effective option is for your planned investment schedule.

Types of Fees

Brokerage

This is the traditional fee model. Brokerage is charged by the company on purchase, and selling of a share or ETF. Online brokers tend to charge $10-$20 per trade (up to $10,000 – $20,000).

Management fee

Many companies are using “brokerage fee trading” as their advertising angle. Instead of a brokerage fee on purchase or selling, they charge you an annual fee for all your funds invested.

For those wanting to invest little and often, this fee structure can be more efficient in the short term.

Micro investment robo advisors are a reasonable option for getting started in the share market.

Because management fees are charged every year, they can end up costing a lot more than just paying brokerage for long term investors.

Micro investment apps are really a stepping stone, before investing using a stock broker once $20,000- $30,000 is accumulated, confidence and strategy developed.

Inactivity Fee

Some brokers charge an inactivity fee. If you don’t trade within a specified time period, you are charged a fee.

To be avoided if you plan to an irregular investor (for example purchasing once you have $10,000 saved).

Part of my emergency plan in case of drop of income or other financial disaster is to stop investing in the share market.

Being charged an inactivity fee in this situation is unhelpful, and I suspect I would forget to close the account.

Access to International Markets

If you plan to buy international funds, you will need a brokerage account that has access to overseas markets. Not all Australian brokers do. You can easily find this out on the website or the decision tool below.

If you are looking at international funds, you will want to look at the exchange fees charged. This is how some international brokers earn their income.

You can generally access broad international ETFs via the ASX, so only need true access to international markets if you plan to trade international stocks.

Online Advice and research

Some online brokers try to bridge the gap between a traditional online “discount broker” and an expensive “full service broker”.

These platforms charge additional fees, but provide access to research and recommendations to help with stock picking.

Cash Management Account & Ability to Buy Quickly

Some brokers make you transfer cash into a cash management account before buying. These generally pay low interest.

For regular, dollar cost average investors this probably doesn’t matter. For anyone wanting to take advantage of market dips, you want to be able to buy quickly. Some brokers allow you to buy, and then transfer the money to cover the purchase.

During times of extreme market volatility, ANZ share trading platform completely failed. If you were looking to buy during the dip, this would have been frustrating.

Online Safety

The majority of security breaches with online share trading are user error. In order to minimise your risk, set complex passwords, and never share them. Don’t use shared computers for share trading. Ensure you are logging into the actual stock brokers website and not clicking on a scam link. Keep a record of you shares somewhere other than you stock broker. Share register in case of fraud. Keep your anti virus protection up to date. Only log in to your online broker with a secure internet connection.

Stock Broker Safety

Your stock broker should use high end encryption to hide the data you are entering from anyone else.

They should have a security area on their website explaining what steps they take to ensure top notch security

The broker needs to have a financial services license, and insurance to cover any claims.

They should have a robust, 2 factor log in process and procedures for handling fraud.

Size and reputation

How long has the broker been in business. Is it backed by a bank or large financial institution. Are there online reviews available?

Customer support

If there is an issue, what sort of customer support is available. Is a phone number to call important to you?

What is the brokers process if your account is fraudulently accessed?

What Happens if the Stock Broker Goes Bust?

When a broker states shares brought through them are CHESS-sponsored, that means you legally own the shares. You will receive a Holder Identifier Number (HIN) that proves ownership. If your broker was to go out of business, you can use the HIN to transfer your shares to another broker.

The alternative to CHESS sponsorship is the custodian model. This means the stock broking company own the shares, and maintain a register of what you are entitled to. If the stock broking company becomes bankrupt and ceases to trade, it may be more difficult to prove ownership.

Easy to Use Interface

Last of all, is the platform intuitive to use? Does it display information in a way that makes sense to you? Do you want a mobile app, and if so is this available?

What to Invest In

Investing should follow an overarching strategy you have worked out in advance. That can begin very basic and evolve over time.

Starting with broad based Australian and international index fund ETFs is a common and easy strategy. Check out Passive investing Australia for more reading on designing your own portfolio.

Ordering your Investment

If you have a full service broker, you will need to call them. For the majority of us, investment purchasing will occur online.

When you have chosen your investment, you will put an order in on your broker’s online platform. With stocks, there are a set number of each stock in existence. There is no guarantee that the stock you wish to purchase will be available (someone needs to be selling). With large company stocks and ETFs with good liquidity, there should always be stock available.

You can purchase using a market order or limit order.

Quantity or Value to be Brought or Sold

You can order a set number of shares or a dollar value you want to buy or sell. I’m not sure why you would want a specific number of shares, it seems easier to order the dollar value you wish to invest.

Market Order

A market order is when you order the stock broker to buy the stock as soon as possible.

The speed of the transaction is dependent upon the actual processing time, and the purchase occurs at whatever the market price is at the second the order is filled. In a volatile market, the price can move quickly.

If there are not adequate shares available, your order can be only partially executed, or executed at two different prices, if the market value changes part way through the transaction. This is more likely to occur in very large orders or less liquid stock.

If a market order is placed outside ASX trading hours (only 10am-4pm Monday to Friday), a market order will be filled at opening. There can be significant variation in price between closing and opening, due to the number of order placed.

For the passive dollar cost averager, who wants to invest every month or three with little regard for price (the market over time, goes up), market orders are very appropriate.

Limit Orders. 

Limit orders allow you set a maximum price you want to buy at. This can be useful for investors who are purchasing out of trading hours (they are at work).

You set a time limit for the order to go through (could be the same day, or within 30 days for example). The stock broker will execute the trade if they can match your order with a seller.

There is, however a risk that the trade doesn’t go through. If the price of the stock increases above your maximum buy price, you may have to change your order to buy the stock. If you are going to buy it regardless, a market order is easier.

Limit Orders to Take Advantage of Dips

Limit orders can be useful if you want to buy extra when the market is dropping. You can set up a buy order if the price drops by 10%, 20% etc and means you don’t need to obsessively watch the market.

If you have had to transfer the cash for the purchase into your cash management account prior, it is earning minimal interest in comparison with your offset account. If you (i.e. with Commsec) can buy and then transfer funds, you must transfer the funds within the 2 day time limit to avoid a fine. Commsec email you when a trade goes through to prompt you to transfer funds.

Limit orders can also be used in selling stocks, to set a minimum price you are willing to sell your investment.

Trailing Stop Loss

A trailing stop loss is a strategy used by traders to limit the loss made. A sell order is set if the investment falls a preset amount or percentage. This makes little sense to long term investors, given the aim is to buy low and sell high.

“Bid” and “Offer”

Many stock brokers display the bid and offer prices. These are the maximum a buyer has bid, and the lowest price a seller has offered to sell the stock.

These are only an indication of the prices available at the second you are looking at it. The prices bid and offered change second to second (and may have altered by the time your market order has processed).

Paying for You Shares

Some stock brokers required the funds for an order to be already sitting in your trading account. Others allow you to place the order, then transfer the funds from your bank account within 48 hours. If you fail to transfer the funds in time (for example by setting a limit order and not noticing it has been executed), a fine (~$100) will be applied to the account.

Share Registry

Once you have purchased your investment, you will receive confirmation from the share registry, with your holder identification number (HIN). This is the documentation you need to prove ownership in the event your stock broker ceases to exist, or there is fraudulent activity on your account. It makes sense to keep a physical and electronic equipment backed up somewhere safe.

Monitoring Your Investments

If you have an active investment strategy, you will need to monitor the performance of your investments regularly, and rebalance your portfolio 2-3 times a year.

If you have a passive strategy, automation is your friend. The best investors historically are those that either died or forgot about their account! If you have multiple ETFs, an annual or bi-annual rebalancing will keep your portfolio allocation roughly aligned with what you intended.

The largest risk to your investments is you itchy fingers! People tend to be constantly distracted by the next big thing, or are tempted to withdraw investments to pay for lifestyle purchases. A clear strategy, written plan and discipline is required to be a successful investor.

Be Mindful of the Tax Man

Every time you sell shares, you will have to pay tax on any profits made.

Dividend income is the regular income provided by some shares and ETFs (instead of profits being invested back into the company for expansion). Dividends are taxed at your marginal rate (45% if you earn >$180,000).

Capital gains are the increase in value of your investment between purchase and sale. No matter how much the stock price has increased, you are not taxed on capital gains until you sell.

Capital gains tax is also generously discounted by 50% from your marginal rate as long as you have held your investment for over 12 months.

A focus on capital gains over dividend income therefore makes a lot of sense to most who still receive employment income, and don’t intend to live off investments for many years.

ShareSight Makes Tax Time Easier

ETFs are tax efficient, but at the same time add complexity.

Sharesight is a free (for up to 10 holdings) online platform that tracks all your investments, and provides all in one tax reporting.

What is a Stock Broker: Comparing Australian Stock Brokers

What is a Stockbroker: Commsec Review

Commsec is more expensive than many of the new online trading platforms. It’s appeal comes from being the largest, and most trusted stockbroker in Australia, and also the ability to trade quickly and transfer the cash over after. The platform also boasts a host of features, online education and active online community discussion group.

Set Up Hassle

To get started opening a Commsec account online, the initial steps are easy and clearly set out. It takes a few days after this for Commsec to contact you, with a few more steps until you are ready to trade. It wasn’t completely intuitive and felt challenging at the time, but their phone customer support were great.

Fees

Brokerage fees start at $10 for trades under $1,000, $19,99 for trades up to $10,000 and $29.99 for trades up to $25,000. There are cheaper options, but worthwhile for those that trade infrequently and value the ease and security of the Commsec platform.

There are no management fees or inactivity fees.

Access to International Markets

Commsec do offer international trading, although you have to set up a Commsec International share trading account, separate from the regular share trading account.

Cash Management Account / Ability to Purchase Quickly

The above fees are only relevant if your happy to open and settle into a cash management account, rather than directly from your bank account.

Given you can purchase at any time and move the funds into the cash management account within 48 hours, this seems acceptable.

Other Features

Commsec allow investment accounts to be opened up in joint names, trust, companies and self managed super funds.

Commsec pocket is a micro-investment platform that is CHESS sponsored. It offers a choice of 7 investment choices and $2 brokerage for up to $1000. It allows automated regular investing.

For those with a commonwealth bank account, investing $1000 at a time, fees are comparable to Commsec. This certainly looks like an option for those overwhelmed by investment option, and a great way to get into a regular investing habit. Over the long term, paying brokerage will work out cheaper than paying a management fee as with Vanguard personal investor (0.2% annually)

Commsec is integrated with Sharesight, making tax time easy.

Size & Reputation

Commonwealth is the largest bank in Australia. It is the most trusted, and most commonly used stock broker .

Customer Support

There are email contact details and phone contact details on the Commsec website. Customer support are friendly and patient

What Happens if they go Bust?

I don’t think anyone could imagine the biggest bank in Australia going bust, and suspect the government would bail them out if some catastrophe did occur. However, never say never, I guess no-one thought Lehman brothers collapsing was a likely scenario (see the Big Short, available on netflix).

Commsec is CHESS sponsored, so as long as you keep your share registry paperwork, you could move your investments to another stockbroker were Commsec to collapse.

Easy to Use Interface

Once the account is open and functional, the platform is very easy to use. They have a mobile app as well as the desktop site. There is a lot of educational material on the website, and Query buttons next to the options to help.

What is a Stock Broker: Self Wealth Review

Self wealth is the best known of the new online trading platforms that undercut the big plyers on brokerage fees. It is CHESS sponsored. The major appeal is the low brokerage fees. If you buy shares monthly, this could save you over $100 in a year.

Set Up Hassle

Captain FI reported in that set up is relatively painless. It is still not instantaneous, as there is identity verification processes that need to occur.

Fees

Selfwealth charges $9.50 for a trade of any size. This is potentially extremely cheap for a large trade. It’s half the price of a $10,000 trade with Commsec.

Access to International Markets

US and Australian trades available

Cash Management Account / Ability to Purchase Quickly

Selfwealth does not allow you to trade from your own bank account. You must transfer funds to the cash management account before you can trade, and this often takes 2 days to clear. This is a non-issue if you are regularly investing no matter what the state of the market. But it makes it very difficult to take advantage of market dips.

Other Features

Self wealth premium is a paid feature (with a free trial) where you can see what trades other self wealth members are making. Of course, it is fairly likely they know no more than you. Following others blindly rarely leads to good outcomes, and we know from studies of fund managers that last years top performer is rarely next years top performer.

Self wealth can also allow you to open an account as an individual, joint account, trust or company.

Self wealth is integrated with sharesight, making tax time easy.

Size & Reputation

Self wealth has been around since 2012. Over 46,000 active investors are using the platform. It has a small proportion of Commsec’s customer base and trust, but growing rapidly.

Customer Support

Customer support available includes live chat and email, no phone contact available.

What Happens if they go Bust?

Because Self wealth are CHESS sponsored, as long as you have your share registry paperwork you can transfer your shares to another platform

Easy to Use Interface

SelfWealth won the Fintech Business of the Year award at the 2016 Optus My Business Awards. Reviews suggest it is an easy to use platform.

What is a Stockbroker: Pearler Review

Set Up Hassle

Currently slow. Still in beta testing so expected to improve significantly as processes are ironed out. There is currently a waitlist so it can take a few weeks to be approved.

Fees

Trading is $9.50 per trade up to $17,500

Access to International Markets

US trades are in testing currently

Cash Management Account / Ability to Purchase Quickly

Funds are transferred into a client trust account with Macquarie prior to purchase of investments. It doesn’t really sound like the platform is suited to purchasing on market dips quickly. As you will here, Pearler is very much a platform built around dollar cost average investing regularly and automatically.

Other Features

The really exciting part of Pearler is the combination of the advanced auto-invest feature with very reasonable fees. It is even possible to set a target portfolio allocation, and allow the platform to invest your regular investment in whichever investment is most underweight.

Automation is an extremely powerful tool in achieving goals. If you have to log in to your share trading account and transfer a few thousand dollars of your hard earned cash every few months, there is a temptation to delay investing or forget about it all together.

Pearler is also integrated with sharesight, making tax time easy.

Size & Reputation

Very early in it’s journey. Building a customer base and trust. Currently 3000 investors with over 1 million dollars invested.

Customer Support

Phone contact and email

What Happens if they go Bust?

Pearler is CHESS sponsored, so as long as you have your share registry paperwork you can transfer your investments to another broker.

Easy to Use Interface

Still being perfected. Watch this space.

What is a Stock Broker: NAB trade Review

Set Up Hassle

Will need to provide identity verification and Tax file number.

Fees

NAB trade offer good value for smaller trades, $14.95 for up to $5000.

$5-10,000 trade is $19.95.

NAB Trade also offers good value for international trades, with brokerage starting at $14.95

Access to International Markets

Yes. US, UK, Hong Kong and Germany markets available

Cash Management Account / Ability to Purchase Quickly

You will set up a NAB trade cash account as part of the set up process. It can take up to three days for cash to clear before you are ready to trade.

Other Features

NAB trade allow you to open an account as an individual, joint, trust, minor, company or SMSF

Size & Reputation

NAB is one of the “Big four” banks of Australia. As such, it is a huge and trusted platform

Customer Support

Phone or email

What Happens if they go Bust?

Again, seems very unlikely the Australian government would let one of the big four banks go bust.

Easy to Use Interface

Similar to Commsec, NAB Trade have a user friendly platform, and mobile app available.

What is a Stockbroker: ANZ Share Investing Review

Set Up Hassle

Requires identification verification

Fees

The standard (default) account will charge you $19.95 per quarter unless you have $10,000 in holdings or have made a trade in the last six months.

You can get out of this by changing to the basic account, but by the looks of the site you need to actively remember to do this to avoid fees.

Brokerage is relatively expensive at $19.95 for up to $5000, $24.95 between $5,000-$10,000. Fees are discounted for the second and subsequent trade within a month.

Access to International Markets

Access to US, UK, Canada and Asia. Brokerage starts at $59!

Cash Management Account / Ability to Purchase Quickly

Identification will require verification. Process takes 1-2 days. Have to have funds cleared in your share investing account before you can make a trade.

Other Features

There is a learning centre which contains articles claiming to give you the knowledge to become a “experienced trader” hmmm.

Size & Reputation

One of the big four banks, so the public have faith in ANZ as a bank. The share trading, however have a poor reputation for being slow, failing to process trades.

Customer Support

Phone

What Happens if they go Bust?

Shares are CHESS Sponsored. Very unlikely to go bust, but could move shares through your share registry account

Easy to Use Interface

Not from reading online reviews. Even if you bank with ANZ, have a look elsewhere to see which stockbroker is ideal for you.

westpac share trading review

What is a Stock Broker: Westpac Share Trading Review

Set Up Hassle

The usual set up process with identity verification will occur, and you need to provide your TFN.

Fees

For the “Investor” account $19.95 per trade up to $18,136 with no monthly fee.

Access to International Markets

Trade US stocks online, 25 other international stock markets by phone only.

Cash Management Account / Ability to Purchase Quickly

The cheapest brokerage listed above is with their “Cash Investment account” which you will need to wait for funds to clear before investing.

Other Features

Westpac offer their own “Ready made portfolios” for overwhelmed beginner investors. The management fee though is 0.42% for the “Growth portfolio” which is more expensive than Vanguard’s Personal investor.

You can open an individual, joint, company, trust or smsf account

Size & Reputation

Westpac being one of the big 4 banks is well trusted and very large.

Customer Support

Customer support available by phone

What Happens if they go Bust?

As a Westpac Share Trading client, shares will be broker sponsored by the Australian Investment Exchange (AUSIEX) on the CHESS subregister.

Easy to Use Interface

Westpac have an easy to use online interface and an app.

Conclusion: What is a Stock Broker?

A stock broker is the intermediary you need to help you buy investments listed on the stock exchange.

Which stockbroker is best suited to you depends on

1. How large / often trades you will make

2. Whether you need to access international markets (beyond large international ETFs available on the ASX)

3. Whether being able to buy quickly (without waiting for funds to clear) or auto-invest is important to you

4. Whether you are happy to go with one of the new online brokers, or feel more comfortable with an old school bank with plenty of market share and long standing reputation.

$1000 trade$5000 trade$10000 trade$15000 tradeInternationalNotable Features
Commsec$10$19.95$19.99$29.99YesAble to purchase before transferring cash
Self Wealth$9.95$9.95$9.95$9.95USAward winning platform
Pearler$9.95$9.95$9.95$9.95US coming soonAble to set up auto-invest regularly 
NAB Trade$14.95$19.95$19.95$29.95Yes
ANZ Share Investing$19.95$24.95$29.95$29.95Yes
Westpac Share Trading$19.95$19.95$19.95$19.95Yes

Looks carefully at what a stock broker fee structure is to choose the best broker for you. Ensure your stock broker has “CHESS sponsorship” to make sure that even if the stock broker goes out of business, you can prove ownership and move your investments.

Aussie Doc Freedom is not a financial adviser and does need offer any advise.  Information on this website is purely a description of my experiences and learning.  Please check with your independent financial adviser or accountant before making any changes.

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