Online Share Broker
The online broker market has boomed in recent times. Retail investors have been buying up 9 billion in equities between February and March 2020. Retail investors make up about 25% of the share market trading volume. Furthermore, this uptake in trading comes a great opportunity for online brokers to capitalise on the new wave of investors. There are 4 popular online brokers that I am going to review namely CommSec, SelfWealth, Super Hero, and Stake. Stake, SelfWealth and Super Hero now allow the option to invest in the US market. Stake offers investors an option to invest directly in overseas markets for $0 brokerage fees. There is also Pearler an online trading platform aimed at investors seeking long term returns that have been reviewed separately. I have summarised the different online share brokers below:
1. CommSec 
Firstly, Commsec (Commonwealth Securities) is well known to investors as it’s the largest online brokerage firm operating in the market for over 20 years. Secondly, they have developed a strong following with a premium analysis of the share market. Thirdly, their broker fees are slightly higher than their competitors. However still a great option for those wanting to access the latest market information.
I have reviewed the Commsec share trading platform features and summarised my findings:
Pro’s
- You can place an order without a deposit
- Make real time cash transfers
- User friendly platform design
- Premium research and data analysis
- Shares are CHESS sponsored (Clearing House Electronic Subregister System)
Con’s
- Trading above $1,000 will incur a brokerage fee of $19.95 per trade
- Trades above $10,000 will incur a brokerage fee of $29.95 per trade
- Cannot get live chat if wanting some additional trading support
- $500 minimum to acquire a parcel of shares
Commsec is a great platform for in-depth market research and navigating the world of share trading. Moreover, the funds are held in the CDIA (Commonwealth Direct Investment Account). These funds are covered under the Commonwealth Government Financial Claims. In other words, this governing fund offers an avenue for claims should the situation arise. However, CommSec could lower its brokerage fees to remain competitive. This would align it with some of the other online broker offerings. In conclusion, there are other brokers that appeal to investors that seek a low-cost option to entering the market.
2. SelfWealth
SelfWealth has been around for a few years now but has recently unveiled its US (United States) offering. This option has become a popular feature for Aussie share traders. US trading is an great option for those wanting a piece of some of the world’s biggest companies.
I have summarised the features of SelfWealth below:
Pro’s
- Flat brokerage fee of $9.50 per trade
- Access to US share market the Nasdaq
- All shares purchased are CHESS Sponsored
Con’s
- SelfWealth Only provide support via email and live chat
- $500 minimum cost per trade to buy a parcel of shares
- Cash transfers can take 1 – 2 business days to be cleared
Firstly, the advantage of SelfWealth to Super Hero is that the shares that you acquire through SelfWealth are being held in your own name. Secondly, these shares are held under your personal and unique HIN (Holder Identification number). Thirdly, each shareholder has a separate HIN. Therefore, this allows the shares to be tracked back to the owner of the shares. In summary, the low, flat broker fee makes SelfWealth one of the cheapest brokers in the market.
3. Super Hero
In this paragraph, I will discuss Superhero a new entrant to the online broker market. Firstly, this platform offers the lowest broker fees on the Australian Market! With $5 to buy Australian shares and free ETFs, it is a low-cost option. You can even now purchase US shares for $0 brokerage with a minimum of $50 USD investment.
However, be aware, that there are a number of things to consider before investing with this platform. Namely, the Shares are held on trust through a custodian structure. Therefore, whilst Super Hero must pay out the dividends it holds the shares in a bare trust. This structure means that they may not be covered under the CHESS system. I have included a summary of the pros and cons below:
Pro’s
- Flat brokerage $5 per trade on the ASX and free brokerage for ETFs and US shares
- Buying Exchange Traded Funds are brokerage free ($5 brokerage to sell)
- $100 AUD minimum to acquire a parcel of shares on ASX or $50 USD on NASDAQ
- Access to US share market the Nasdaq stock exchange
Con’s
- All Shares purchased under the one HIN registered to Super Hero Nominees Pty Ltd
- Limit orders only available to premium customers at a price of $9 per month
- Shares are acquired via a custodian model; authorised to hold the assets in custody
- Not covered by the National Guarantee Fund (NGF)
Read the Product Disclosure Statement
When considering using Superhero as a broker it’s in your best interest to read the Product Disclosure Statement (PDS). This is important for all brokers to ensure they are aware of the terms and conditions of trading. This can generally be found within the terms and conditions on the website.
Superhero is not a market participant and therefore not covered by the National Guarantee Fund (NGF). Most importantly, the NGF is designed to reimburse investors for claims. Similarly, these claims may be linked with dealings between traders or brokers. As a result, investors may be exposed to greater risk in a downturn. On the other hand, this new online broker offers a low-cost option with ETF’s being traded brokerage-free. In addition, investors may see this as a selling point when investing in the ASX. Certainly do your research into the broker before making a final decision. Get US$10 of Tesla on us when you sign up with Superhero and deposit $100 or more into your Superhero account within 30 days. For disclosure, inviting a friend will allow both parties to receive a $10 Tesla reward. I currently trade with Super Hero amongst other platforms when investing in shares and ETFs.
4. Stake 
To cover other options available I have also identified a broker that offers trading opportunities on the United States share market. To clarify, Stake is a Sydney-based fintech offering Australian investors access to more investment options overseas. I have summarised the trading platforms attributes below:
Pro’s
- Free brokerage for US share trading
- Simple trading platform interface
- Diversify share portfolio with investment options in overseas markets
Con’s
- Forex conversion fee charged per transaction
- Exposure to foreign currency risk/volatility
- May be subject to 15% US withholding tax
Getting exposure to the biggest markets in the world is an attractive selling point for online brokers. Investing in the US markets may incur greater tax compliance. For instance, foreign income could be subject to a withholding tax of 15%. Furthermore, this tax would then need to be claimed back when lodging your tax return. Above all, compare the brokers to determine what suits your investing strategy. For more information, I have written an article about investing with Stake to enter the US share market.
Wage investor focuses on investment strategies that can build long-term wealth to realise financial independence. Please note that this post is general in nature and not financial advice.
