One of the biggest drawbacks of share investing are the brokerage fees. These can really eat into any gains – especially if you’re not investing large amounts of capital.
Unfortunately in Australia we don’t have access to platforms like Robinhood which offers free stock trading. But if you’re a bit creative, there are ways to cut down on your fees. Here are my picks for the cheapest stock trading platform
Spaceship Voyager – No fees unto $5k
Spaceship Voyager is a micro-investing app that lets you invest in one of two stock portfolios. One is a regular index portfolio made up of the top Australian and International companies. The other is a portfolio made up of future looking companies. Think Netflix, Tesla, Apple etc.
The best thing about Spaceship is that you can invest in stocks without paying any fees. This makes it perfect for younger investors or people who don’t have a huge amount of cash to drop on shares. You can get started with as little as $5. There are no fees for balances under 5k and then once you’re portfolio grows above that you are charged a standard % fee – which I’ve found to be about the same as other similar funds.
I use Spaceship, and do so because trying to pick and trade stocks on my own would be foolish. I would rather a team of more qualified people put together a proper portfolio. Most retails investors who try and trade stocks on their own will end up losing money or at the very best, doing know better than an index fund. In fact even the top fund managers often fail to outperform automated index funds.
With Spaceship Voyager you’re still investing in stocks, but your portfolio is managed for you. If you’re just getting started investing, I don’t think there is a cheaper way to invest in stocks. You can’t beat free! Here’s a promo code for Spaceship Voyager which will give you a bonus $5.
Commsec Pocket – $2.50 per ETF Trade
Commsec pocket is a relatively new app from the Commonwealth Bank. Through Commsec pocket, you can invest in a number of themed portfolios. These portfolios are actually just ETFs. And ETF is just a fund which is usually made up of stocks or bonds. Shares in the fund are traded on an exchange. Hence why they are called ETFs or Exchange Traded Funds.
This is probably the cheapest way to invest directly in an ETF of your choice. Products like Raiz, invest in the same type of ETFs and when I ran the numbers it worked out cheaper for me to use Raiz (which charges a monthly fee). It all depends on how often you want to invest in stocks.
If you want to save up a reasonable amount of capital (like $500 at a time) and invest it in Commsec Pocket, it seems to be a very good deal. But if you’d prefer to invest smaller amounts at regular intervals (like $50 weekly), it’s cheaper to use Raiz.
IG – $8 per trade
IG is probably the cheapest standard broker in Australia. IG offers both CFD and regular share trading. I recommend most people should be looking at regular shares and not CFDs (they are more complex financial instruments). You can buy a share(s) on IG for $8 per trade. Which means you will also pay $8 when you sell.
That means you would need to make a gain of at least $16 to offset any fees. So a platform like IG works best when you’re investing larger amounts of capital. I wouldn’t be looking at IG if you’re investing less than $1000. It’s probably better to start with micro-investing or use something like commsec pocket.
Raiz – $2.50 per month
Raiz is a micro-investing app that lets you setup regular recurring investments, or even automated investments based on your spending. You can invest in one of 6 different portfolios – older people will want to invest a portfolio that will protect their capital. Younger people will want a more aggressive portfolio that will gain value over the long term.
I’ve been using Raiz for the past few years and apart from 2020, I’ve had great returns. Just like Spaceship, you Raiz portfolio is managed and put together by experts. These types of diversified index portfolios tend to outperform most funds (in the past, and obviously that could change in the future).
Raiz charges $2.50 per month. If you invest small amounts weekly or fortnightly, then Raiz works out to be a really good deal. Simply because you don’t need to pay a fee every time you invest. Raiz also offers a promo to get $5 free when you sign up.
Commsec – $10 per trade
Commsec (which is the trading platform offered by Commonwealth Bank) charges $10 per trade for trades up to $1000. This is pretty average and nothing to get excited about. It is cheaper than alternatives such as ANZ’s share trading platform. If you’re looking for the security of a large institution to invest with, then could be something to look at.
The platform is outdated and really poorly designed. Hopefully they will update it as more and more competitors start to emerge.
eToro – No commissions
You can trade stocks on eToro without paying any fees, but there are a couple of catches. Firstly its a CFD trading platform. I only recommend CFD trading to more experienced traders as it can be more confusing and riskier if you don’t know what you’re doing. eToro also charges a $5 withdrawal fee that you should be aware of. There is also a spread to be mindful of. And if you don’t know what a spread is, then I wouldn’t recommend this platform to you. The upside is you can trade stocks from all over the world and you can buy fractional shares.
Read More – Here are some of the investing apps I’m using in 2020.