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Buy or sell shares and ETFs directly via an online share trading platform. Online share trading is simply buying and selling shares in listed companies over the internet. It has given the ability to invest in the share market to anyone with a computer or smartphone connected to the internet.
Online share trading platforms give you access to charting, research, and other useful tools to help you invest.
As a nation, Australia is buying and selling more shares online than ever before. The Investment Trends 2015 First Half Online Broking Report, based on a survey of more than 15,000 traders and investors, showed that the number of active online share traders increased rapidly from 595,000 in November 2014 to 620,000 in June 2015.
With over 2,000 companies listed on the Australian share market alone, there are plenty of investment options to choose from. CANSTAR can’t tell you what to invest in, but we can tell you which trading platforms offer outstanding value for money.
Brokerage: The main fee that online share trading customers pay to stockbroking firms is brokerage: a fee charged to buy or sell shares and to monitor and manage conditional orders.
The good news for customers is that the average cost of brokerage per trade has continued to fall over the past five years since 2010, for both high-value and low-value trades. As our 2015 report found, the average cost of placing a $100,000 trade has fallen by an average of over $8 over the past five years, representing a decrease of 7.67%. The cost of placing a $5,000 trade has also fallen by over $6, which is a substantial decrease of 23.99%.
Information service fee: A fee charged by a stockbroker to provide information about the current or delayed prices of shares listed on the ASX.
Fail fee: A fee charged by a stockbroker to the seller if the seller fails to deliver the securities, or to the buyer if the buyer fails to make payment by the settlement date.
We research and rate 20 providers of online share trading platforms, which we compared based on how they perform for traders with different usage patterns. To a certain extent, value for money in an online share trading platform depends on how much and how often you invest in shares.
CANSTAR classifies investors into three different profiles for the purpose of assessing online share trading platforms:
Not all investors need the same services from their platform, since the features you want depend on how often and how much you trade. The two general areas we measure when determining who offers an outstanding value platform are price and features.
One of the most crucial factors in terms of value for money is how much it costs to invest and trade. This includes the cost to place a trade (brokerage fee) and any ongoing account-keeping costs for an account attached to platform.
The main features that CANSTAR assesses in determining value ratings include:
John has been regularly saving into an account that has accumulated a little over $30,000. He doesn’t need the money in the short-term, so he is interested in trying to achieve higher returns through the stock market.
John has done his research and decided on the way he will develop a portfolio, but he now needs to find a platform to do that on. John’s investment approach will see him trade around 5 times a month (40 times a year), putting him in CANSTAR’s Active Investor profile.
Like other Active Investors, John should consider looking for a platform that provides detailed company and market information, a dynamic trading platform, and the availability of margin loans if needed.