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Deciding on a broker

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Linus van Pelt

Joined
28 May 2020
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Hi,

Sorry if this is a FAQ. I did Google and search this forum at length before posting. If I missed the answer to my below question(s) feel free to just post a link and say "DYOR"

I'm new to share investing/trading and need to decide on a broker. My bank is Westpac. A bit unhappy with their customer service at present but that's another story.

From my Googling and searching this forum:

  • Westpac and Commsec have similar brokerage. Google (can't find the exact link right now) says Westpac has good research.
  • However, this forum has a fair number of messages saying the Westpac platform has had stability issues in the past.
  • CMC, IB, Selfwealth, Bell Direct have low(er) brokerage.
  • IB seems to be the bees knees (according to @tech/a who I greatly respect). However, the application process seems onerous, and IB may be more than what I need (see below).
  • Commsec allows T+2 settlement. Don't know about other platforms.
  • I want to own the shares.
  • A nice-to-have is a good phone (Android) app.
  • Starting out I will only trade the ASX, investing to start, weekly trading later.
  • I have an inheritance, and want to park my money somewhere (investing) while learning to trade (so I need a broker asap).
  • From reading the Dump It Here thread, it could take me 1+ years to get started trading. So initially my trade volume will be small and brokerage less of an issue.
Here are my current thoughts:

  • Open a Commsec account for now. Quick application, seems to be used by a number of members, seems to be reliable, backed by a large bank, I would own the shares.
  • I'm willing to open multiple accounts, such as CMC, Bell Direct, et. al., just to develop my own experience and opinion of the platforms. But that may be overkill? Eventually I would settle on just one.
  • I need to do more research on which brokers allow me to own the shares (or you can just tell me ), as that will be a deal breaker for me (unless you convince me it's not that important?). Again, I greatly respect @tech/a, and he doesn't seem to be worried using IB.
That's all for now, thanks in advance for sharing your thoughts.
 
Selfwealth have the lowest brokerage, so that's what I would use for investing. Their platform is very primitive, though. But you can open a Westpac brokerage account without funding it and still get research and live prices as well as EOD data.
 
Stability issues mentioned are probably actually exchanges getting swamped.
I have complained about Westpac in this regard, but ultimately, most brokers have the same problems when the exchanges are swamped.

The T+2 thing is from the exchange,
So, if I buy today Wednesday, money goes out Friday close or thereabouts. Around 3pm broker specific.

For Westpac,
If I sell tomorrow, at a profit, no money goes out on Friday. Instead, the profit would come back Mundy.
It's a 24 hour offset function.

I imagine comsec may be the same? in the offset regard.
Good luck and commiserations on the reason for the inheritance.

If you choose Westpac, let me know and I will give you a special phone number... for special people who cut the queues ..

F.Rock
 
Habakkuk said:
Selfwealth have the lowest brokerage, so that's what I would use for investing. Their platform is very primitive, though. But you can open a Westpac brokerage account without funding it and still get research and live prices as well as EOD data.
Click to expand...
I do want to trade eventually, so I'm happy to pay for Amibroker and Norgate to get used to the process. That would give me EOD data. But if Westpac didn't charge inactivity fees (I can look it up) then sure I would read their research.
 
If the broker is Chess Sponsored, you own the shares guaranteed.

IB not chess sponsored, but highly unlikely to go bust.

Westpac App is ok, better than their standard web platform. They do offer the IRESS platform also which I suspect could talk to Amibroker to get data. Dunno though.

I have stayed with Westpac as I like the borrow free money for 24 hours offset thing... trade costs only.

PS, don't bother ringing brokers around open and close times of ASX... elevator musac
 

Thanks F.Rock. If you or anyone else can comment on Westpac vs. Commsec please do so. I will say searching this forum for "Westpac" soured me on the idea, but I'm open to Westpac, esp. if folks' recent experience with Westpac have been good.

Of course having everything with the one bank may be an advantage (???) but not a deal breaker, I can just move money between banks.
 
I have an inheritance, and want to park my money somewhere (investing) while learning to trade (so I need a broker asap).

I started with using a broker for advice (eg don't buy CBA float at $4.50 i think) and that put me off them forever.

Do you want a broker for recommendations or the platform to buy your own choices?
 
Apologies if I've used the wrong terminology. By "broker" I meant "share trading platform".

I might solicit advice on where to park my money, either on ASF or elsewhere. But that is a separate discussion to this thread.
 
Linus van Pelt said:
Apologies if I've used the wrong terminology. By "broker" I meant "share trading platform".

I might solicit advice on where to park my money, either on ASF or elsewhere. But that is a separate discussion to this thread.
Click to expand...


No not wrong terminology, just wasn't sure which you meant.
 
i've been trading thru IB (mainly options) for about 12 years now. great pricing (especially when it comes to ASX options it just blows every other broker out of the water), excellent customer service thru the live chat facility on the account management portal, and the platform is super reliable - i don't remember it ever going down in those 12 years. highly recommend - but with caveats.

as you might already be aware, it uses the nominee account model, not CHESS. so in the event of broker failure - you could potentially lose everything save for whatever is covered by the AFG (which i understand to be the first 250K AUD of cash only). whilst the chance of that is miniscule, it's not zero.

none of us can say how much of a concern that would be for you - we don't know your tolerance for risk, how you intend to run your portfolio, other circumstances etc. i personally wouldn't be comfortable with putting my entire capital base in a nominee account broker though - my IB account typically hovers around 20-30% of my overall portfolio.

i'm more of an investor/trader, not an out & out trader though - the 70-80% that i don't use for options trading is in long term buy & hold investments, and for that a local ripoff broker is just fine. probably better actually, the extra brokerage doesn't really matter since you buy once then hold for years and years, and is a small price to pay for that little bit of added security keeping the holdings in CHESS.
 

Mate, just open all the accounts that are free to open and maintain and then get familiar with their platforms and choose which one works best for you.

I suppose much will depend on your investing and trading behaviour in relation to fees. Are you looking to invest over a long duration or trade daily, weekly or monthly? Perhaps you just want to build a diversified equity portfolio?

You should probably sign up with the ASX for their free trading tournament before you start buying stocks; so that you get an understanding of how the market works and getting to know the basics.

Remember that equities/stocks aren't the only asset; you have fixed income, property, precious metals and various other financial alternative asset options to spread your wealth.
 
Linus van Pelt said:
I might solicit advice on where to park my money, either on ASF or elsewhere. But that is a separate discussion to this thread.
Click to expand...
Would recommend you solicit ideas, opinions and suggestions only.
Asking for and receiving advice from non licenced financial "advisors" is a no no, which this brilliant forum strictly adheres to.
 
Interactive Brokers do have a "paper trading" facility (I think that is what it is called) that allows you to do hypothetical trades to understand the mechanics of trading and give you some feeling for what you are likely to earn from trading (though how you respond in a no risk environment is not the same as how you would respond with your money on the line).

I have never used it so I can't offer any opinion on how useful it is.
 
While not a broker, the Iguana Spark data platform looks interesting.
Seems like it does a lot that I am interested in, for a price though.
They offer a 2 week trial, which I will take up the offer on, when time and finances permit.
From sounds of it in the dump thread, IB is probably your cup of tea.
Once you are all over Amibroker, or maybe even concurrently, have a look at https://www.asx.com.au/services/trading-services/asx-centre-point.htm
No doubt, the order coding will be a walk in the park for yourself.
Other mentions of it haven't been seen to have been given any thought, despite the display of "I've been thinking".

If it's going to be a lonely venture, you may as well be amongst the best, and "trade in the dark" and surprise muppets like me.

All the best on your journey, young fella.
F.Rock
 
Linus van Pelt said:
If you or anyone else can comment on Westpac vs. Commsec please do so.
Click to expand...
I have accounts with both. I prefer the Westpac Online Investing one more so. I get on the Westpac site daily and I very rarely have had any issues, in fact I like it. I haven't experienced an outage for a few years now. Their research is free of charge. When you click company info you also get a "company wrap" PDF from Morningstar.

When I am out and about I use their app too, however I don't buy and sell on the app, too old/sun glare/can't see the screen properly/scared to make a mistake but for younger people this might not be an issue. I prefer the security of CHESS holdings as I keep my stocks for long periods of time and don't trade all that much. It's good to have a secondary back up broker, just in case things ever do go down. Good luck with your choice.
 
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