If you want to start trading online, here are five cheap platforms to get you started (Source: Getty)
Lockdowns have led to a rise in Australians taking up online trading and investing. However, it can be hard for novice investors to know which platform is right for you when there are so many out there.
Each platform has its own pros and cons but if it’s the cost of trading you’re most concerned about, here are some of Australia’s cheapest trading platforms.
eToro is free to get started and you will pay no commission on stock and exchange traded fund (ETF) purchases. It also charges no management fees.
However, there are fees attached to trading cryptocurrencies and contract for differences (CFDs). CFDs are a financial contract that pays the difference in the settlement price between the open and closing trades.
For cryptocurrencies, the fee you are charged will depend on which digital asset you are purchasing. For Bitcoin you pay 0.75 per cent, but for Ripple, or XRP, you‘ll be paying 2.45 per cent.
Depending on which asset you’re most interested in you should check out their website to make sure you know what fees you‘ll be hit with.
For CFDs, eToro charges different fees for different currencies or commodities you hold, much like with cryptocurrencies.
The fees are based on the difference between the purchase price and the selling price.
As soon as you open a new trade, or make a purchase, you will see a “loss” in the position, as this is when the initial fees have been calculated.
This means if you buy shares for $100 you would see them in your portfolio listed for $99.90 if there was a 0.1 per cent difference in the buy and sell price.
The final fee will be calculated when you close the position (or sell the asset) and will be determined by the final closing price.
Capital.com has a similar structure in that there are no deposit, withdrawal and opening or closing of trade fees.
You also don’t have to pay a commission fee.
To make its money, Capital charges fees based on the buy/sell spread. This means that you pay the difference between the buy and sell prices.
That means if you bought a share for $10, but it was selling for $9 you would pay $1.
With Capital, the spread is incorporated into your trade quote and is never an additional charge.
The price of the spread varies across different assets so again, it is best to look at what it is that you want to buy to double check how much you are being charged.
3. IG Markets
While IG is based in the UK it is very popular with Aussie investors and even holds an ASIC license so is fully regulated under Australian law.
Its trading fees vary depending on the assets you’re trying to purchase. CFDs are charged at around 0.08 per cent and trading international shares will cost around 0.1 per cent.
IG also has a minimum deposit of $400 and charges between 0.5 per cent and 1 per cent for using an Australian credit or debit card.
IG also charges commission on the trading of Aussie shares. So, if you make three or more trades per month you will be charged $5 or 0.05 per cent – whichever is higher.
If you make less than three trades per month you’ll be charged $8 or 0.1 per cent – again, whichever is higher.
This means that if you made three trades every month for a year you’d be charged around $60 or if you made less than three trades per month you’d be charged $96.
Superhero is another popular trading platform for Aussies to get into the market. There is no joining fee and there is no commission.
You will not have to pay any brokerage for trading US shares but there is a $5 brokerage fee for Aussie shares.
Through Superhero, you can also set up a self-managed super fund, where you can choose to invest your own retirement savings in line with the Australian Taxation Office (ATO) requirements.
There is also a minimum trade size of $100 and you will be charged $5 per ETF if you transfer your existing ETFs out of your account in less than 12 months.
You’ll also be charged $1 for processing BPay transactions.
Previously only offering access to US shares with zero brokerage fees, Stake announced on Monday that it would expand its offering to ASX listed stocks for $3 trades.
There are no sign up fees but if you’re trading currencies, you will be charged 0.7 per cent on all deposits and withdrawals – and if you want your money on the app faster you can pay an extra 0.5 per cent for express.
For example, if you have $5,000 and place one trade per month for a year, you will pay $35 in fees.