I am starting my investing journey from scratch, with little to no previous background or experience in the investing world. I would like this section to include all of my financial insights and learnings I’ve obtained navigating through this unfamiliar territory.
My plan:
Currently from what I know so far, my plan consists of:
- Passive investing – I intend to invest in index funds through dollar-cost averaging.
- Active investing – I want to reserve a portion of my investments for some speculation in specific stocks.
Finding a good stockbroker in Australia
Before I begin investing, I need to firstly find a good stockbroker. While I am with Commonwealth Bank and they do offer an investing platform, I still want to do my own research to see what other options are available.
There are many variables to take into consideration when choosing a stockbroker, including
- Brokerage fees – brokers will charge a fee per transaction you make.
- What types of trades/investments you would like to be involved with? For now, I am keeping it simple and only looking to buy stocks/index funds/ETFs.
- How much money you are willing to invest – some brokerages have account minimums or minimum transactions.
- Sponsorship (CHESS or custodian) – Simply put, if you are with a CHESS approved broker, it means the shares are owned by you. Other brokers operating under a custodian model hold shares on your behalf, which may have worrying implications if the companies go down. Having the shares in your name also means that you’re able to perform dividend reinvestment, which cannot be done if the holdings are in the broker’s name.
- Inactivity fee – Some brokers charge enormous inactivity fees, which is something to look out for.
A helpful link which I found to assess between different stock brokers are seen in the link below:
https://tradecost.io/best-online-share-trading-platform-comparison-australia/
What brokers I have chosen:
I have chosen two brokers, one for each of my specific goals of passive and active investing.
> Active investing – CommSec. I have chosen CommSec as they have scored well on the criteria I have listed above.
> Passive investing – Vanguard. This was my choice because of the low fees offered by Vanguard to invest in index funds.
