Here’s the confusing thing, while it is called the stock market, it’s not like any other market you’ve been to. You can’t head directly to the stock market, or sign up to an online account with the stock market, and buy stocks directly. Instead, everyone from the newest investor to the largest investing institutions in the world, have to sign up with a broker to buy and sell stocks.
This is the first step on every person’s investing journey. And it is often a confusing one. Questions about brokers is easily the most common type of question we get here at Equity Mates. So, on this page, we’ve summarised everything we’ve learned about brokers and how we think about choosing the right one.
Our #1 Most Important Rule for Choosing a Broker
Don’t let perfection be the enemy of the good. Choosing any broker is better than not choosing at all.
You can have multiple brokers. There is no switching cost when it comes to moving between brokers. There will always be new platforms and better offers coming to market, and you can move. There is no lock in contracts.
Whatever broker you choose you’re accessing the same companies at the same price. Whether you buy BHP stock through CommSec or Stake, it is the same BHP.
We find so many new investors get overwhelmed at the number of brokers. There’s too much choice so they don’t make a choice at all. That is why our number 1 rule is don’t let perfection be the enemy of the good. Just choose a broker and get started.
What is an online broker?
An online stock broker is a platform that allows investors to buy and sell stocks, bonds, ETFs, and other securities through the internet. These brokers provide individuals and traders with an online platform to access financial markets and execute trades in real-time.
Through an online stock broker, investors can create and manage their investment portfolio, conduct research on various investments, monitor market trends, and execute trades at their convenience from a computer or mobile device. Online stock brokers have become increasingly popular due to their convenience, accessibility, and often lower fees compared to traditional brick-and-mortar brokerage firms.
Users typically sign up for an account with an online stock broker, and upon verification, they can deposit funds into their account and start investing in a wide range of assets. The broker’s platform often offers tools and resources to assist investors in making informed decisions, such as real-time stock quotes, market analysis, and investment research.
What are we looking for when choosing an online broker?
- Broker offers autoinvest (sometimes known as recurring investment)
- Allows us to invest small amounts of money
- At a minimum, less than $100 at a time
- At best, invest from 1 cent
- Allows us to do it cheaply
- At minimum, total cost less than 1%
- At best, free
- Don’t sell risky financial products (like CFDs. Seriously don’t use CFDs – the UK Financial Conduct Authority found 82% of investors lose money. It’s not worth it).
Which online broker is best for investors?
Broker Name | Brokerage Cost | Minimum Investment | Does it allow autoinvest? | Markets you can access | Link |
Bell Direct | $15 | $500 for Australian shares $1,000 for international shares | ❌ | Australia | |
Bendigo Bank Invest | $5 | $1,000 for Australian shares $2,000 for international shares | ✅ | Australia | |
CMC Markets | $0 for investments below $1,000. After that, $11. | $500 for Australian shares $1,000 for international shares | ❌ | Australia and International | |
CommSec | $10 for investments below $1,000. After that, $19.95 | $500 for Australian shares | ❌ | Australia and International | |
CommSec Pocket | $2 | $50 | ✅ | Australia | |
HSBC Australian Shares | $19.95 | $500 for Australian shares | ✅ | Australia | |
IG | $5 | $450 | ❌ | Australia and International | |
Interactive Brokers | $5 or 0.08% (whichever is greater) | NA | ✅ | Australia and International | |
Macquarie Online Trading | $19.95 | NA | ❌ | Australia | |
MooMoo | $8.80 | NA | ❌ | Australia and International | |
NAB Trade | $9.95 for investments below $1,000. After that, $14.95 | $500 | ❌ | Australia and International | |
Pearlr | $6.50 | $500 | ✅ | Australia and International | |
Saxo Markets | $8 | $50 | ❌ | Australia and International | |
Self Wealth | $9.50 | $500 | ❌ | Australia and International | |
Stake | $3 | $500 | ❌ | Australia and International | |
St.George Directshares | $19.95 | $500 | ❌ | Australia and International | |
Superhero | $5 AU, $0 US | $100 | ✅ | Australia and International | |
Tiger Brokers | $6.49 AU, $1.99 US | $500 | ✅ | Australia and International | |
Westpac Share Trading | $19.95 | $500 | ❌ | Australia and International |
Frequently Asked Questions
Getting started with investing in shares can be a relatively quick process, especially with the advent of online brokerage platforms. Here’s a step-by-step guide on how quickly you can start investing in shares:
Research and Education: Spend some time educating yourself about the stock market, how shares work, and the basics of investing. There are numerous online resources, articles, and videos available to help you gain a basic understanding.
Choose an Online Broker: Select a reputable online brokerage platform that suits your investment needs. Look for factors like fees, account types, user interface, research tools, and customer support.
Account Setup: Sign up for an account with your chosen online broker. This process typically involves providing personal information and may require some verification steps. Depending on the platform and the required verification, this step can take a few minutes to a few days.
Fund Your Account: Once your account is approved and set up, you’ll need to deposit funds into your brokerage account. Most brokers offer various funding options, such as bank transfers, credit/debit card payments, or electronic transfers. The time it takes to fund your account can vary depending on the funding method you choose, but it’s usually a matter of a few minutes to a few business days.
Choose Shares to Invest In: With your account funded, you can start exploring the stock market. Research companies you’re interested in, analyze their financials, growth prospects, and overall performance. Based on your research, decide which shares you want to invest in.
Place Your Trade: Once you’ve selected the shares you want to buy, place your trade through your brokerage platform. Online brokers offer user-friendly interfaces that make it easy to execute trades. In most cases, the process of buying shares can be completed within a few clicks.
Confirmation and Ownership: After placing the trade, you’ll receive a confirmation of your purchase, and the shares you bought will be recorded in your brokerage account. Congratulations, you are now a shareholder!
It’s important to note that while the process of setting up an account and buying shares can be quick, successful investing requires thoughtful research, risk management, and a long-term approach. Take the time to develop an investment plan, diversify your portfolio, and avoid making impulsive decisions based on short-term market fluctuations. Always remember that investing carries inherent risks, and seeking professional financial advice can be beneficial, especially if you’re new to the stock market.
When choosing an online broker, it is important to consider your individual needs and goals. Some factors to consider include:
Fees: The fees charged by different brokers can vary significantly. It is important to compare fees before you choose a broker.
Features: The features offered by different brokers also vary. Some brokers offer more advanced features, such as access to research tools and charting software.
Education: Some brokers offer more educational resources than others. This can be helpful for beginners who are still learning about investing.
Once you have considered these factors, you can start to narrow down your choices and choose the best online broker for you.
This is a personal decision, but some of the most popular brokers for beginner investors are:
Sharesies
Pearlr
Superhero
This is a personal decision, but some of the most popular brokers for more advanced investors are:
Stake
CommSec
CMC Markets
Yes, you can buy international shares through a brokerage account. Most Australian brokers will offer access to the United States share market and some will offer access to markets in Europe and Asia as well.
The fees charged by different online stock brokers can vary significantly. Some brokers charge a flat fee per trade, while others charge a percentage of the trade value. Some brokers also charge fees for things like account maintenance, research, and charting.
It is important to compare fees before you choose an online broker. You can find this information on the brokers’ websites or by contacting their customer service departments.
The features offered by different online stock brokers also vary. Some brokers offer a basic platform with the ability to trade stocks and shares. Others offer more advanced features, such as access to research tools, charting software, and margin trading.
It is important to consider the features that are important to you before you choose an online broker. For example, if you are a beginner, you may want to choose a broker with a basic platform that is easy to use. If you are an experienced trader, you may want to choose a broker with more advanced features.
Many online stock brokers offer research tools to help you make informed investment decisions. These tools can include things like stock screeners, analyst ratings, and company financial reports.
It is important to use research tools to help you identify stocks that are worth investing in. However, it is also important to remember that research tools are not always accurate. You should always do your own due diligence before making any investment decisions.
Many online stock brokers offer educational resources to help beginners learn about investing. These resources can include things like online courses, webinars, and articles.
It is important to learn about investing before you start trading stocks. Educational resources can help you understand the basics of investing and the risks involved.
There are many factors to consider when choosing an online stock broker. Some of the most important factors include:
Fees: The fees charged by different brokers can vary significantly. It is important to compare fees before you choose a broker.
Features: The features offered by different brokers also vary. Some brokers offer more advanced features, such as access to research tools and charting software.
Education: Some brokers offer more educational resources than others. This can be helpful for beginners who are still learning about investing.
Customer service: The customer service offered by different brokers can also vary. It is important to choose a broker with customer service that is responsive and helpful.
Once you have considered these factors, you can start to narrow down your choices and choose the best online broker for you. Here are some additional tips for choosing an online stock broker:
Read reviews: Read reviews of different online brokers to get an idea of what other investors have experienced.
Talk to a financial advisor: If you are not sure which broker is right for you, talk to a financial advisor. They can help you assess your needs and goals and recommend a broker that is a good fit.
Start with a demo account: Many online brokers offer demo accounts that allow you to trade stocks with virtual money. This is a great way to try out a broker’s platform and features before you commit to opening an account.
Choosing the right online stock broker can be a daunting task, but it is important to do your research and choose a broker that is a good fit for your needs. By following these tips, you can find the best online stock broker for you and start investing today.