I’m a big fan of shares as a long term investment, and along with a wide variety of listed stocks to choose from, investors can trade for brokerage as low as $11. Compare that to the cost of buying and selling other assets like property, and it’s easy to see how shares allow investors to put more of their money to work.
Figures from the Australian Securities Exchange (ASX) show more than one in three adults own shares either directly or indirectly, making this one of our most popular investments. Part of the appeal is that it doesn’t take a lot of cash to get started with shares, and you can steadily grow a portfolio over time by investing whenever you have spare funds.
Thanks to online broking ordinary investors can trade shares from virtually anywhere. But with 42 online share trading platforms offered by 17 different institutions, it can be hard knowing which broking service is right for you.
The cost of brokerage is one aspect to consider especially if you’re trading small sums. The less you invest in each trade, the higher brokerage costs will be as a proportion of your capital. For casual investors some of the cheapest brokers include CMC Markets ($11) and nabtrade ($14.95). Be sure to read the fine print as some broking packages also come with monthly fees.
There are other factors to weigh up. The ability to check your portfolio balance online and have easy access to market data is a plus, and a survey by research group Canstar found one in three traders look for a dynamic trading platform. This puts real time (as opposed to delayed) market data at your fingertips and it avoids the risk of placing an order for shares and paying more than you expected.
Other aspects to weigh up include the research offered by your broker. In particular look to see if it is written in a way that is clear and easy to understand.
In order to buy shares you will need a bank account linked to your broker’s share trading account. Many brokers are quite specific about which bank you can use for this, and if you don’t plan to trade often it can be convenient to use a broker where the linked account is with a bank you already use.
Most importantly, look for a broking platform you can comfortably navigate your way around. When markets are volatile and you want to trade quickly, the last thing you need is to be unsure of how the system works.
The latest Canstar star ratings report on online broking found a number of brokers offer outstanding value for investors who only trade a few times a year. They include nabtrade, Westpac, CommSec and CMC Markets, which picked up Canstar’s Online Share Trading Broker of the Year award.