Stake vs. Selfwealth vs. Other

[jono543]

I’m opening my first broker account, I narrowed it down to Sake and Selfwealth.

It Looks like stake is a US broker and Selfwealth is Aussie.


This is my 1st time opening a broker account so I'm not 100% sure how things work so I checked out there FAQ and email them some questions. The main points I got from them are below...



Stake

- Zero fees

- Stake does not actually hold any assets or funds. Based on their FAQ my understanding of how they work is: macquarie bank > OzForex (OFX) > DriveWealth which is a US broker-dealer and ICBC FS is the custodian ultimate custodian (DriveWealth is sub-custodian)

- They make their money on the OFX fee

- They Do not sell order flow (based on google search it seems to be a good thing but I’m not really sure)

- They say that I own shares in my name (both full shares and factional shares)


What I think about stake

I don't understand how its even possible for factional shares to be in my name.

It takes T+2 day to settle, however I want to sell stock A and buy Stock B immediately. I emailed them asking them about this and they told me that they have plans in the future to add this feature but did not give me any time frame.

I think maybe they might have more assets than Austrian brokers because they are based in in the USA but I have no idea because I don’t really understand much yet.


I think maybe I might save of FX fees but I'm not really sure.
The account will be in USD so I only pay FX fees when I despot/withdraw.
However once I have the USD balance in my stake then I think there are no FX fees when I buy/sell assets because my account is in USD already, For example: USD => SHARES => USD and therefor does not have FX fees but I’m not 100% sure.





Selfwealth

- $9.50 flat fee

- Australian broker and they said they use ASX

- They Do not sell order flow (based on google search it seems to be a good thing but I’m not really sure)

- They say that I own shares in my name

- I can sell share A and buy share B immediately (no need to wait T+2 days)


What I think about SelfWealth

Maybe because I'm in Australian and this broker is also based here maybe its safer.

Cheaper than the bank brokers fees, I think one from the bank wa $19-$30 + x%.
I did not know that brokers can take x% from you trade and this was first time I found this out and I thought this is crazy.

However then I thought that maybe paying more in fees to a big bank might be safer than a smaller broker like SelfWealth.

However if I own shares in my name then I don't really understand why it would matter if I have a small broker that goes bust when I can claim the shares because the shares are in my name but the problem I have is I'm not 100% sure of this.






Help me out here...


1.) I do NOT trust what Stake and SelfWealth say in their FAQ, is it somehow possible for me to verify what they say is true?


2.)

a.) Are stocks bought and sold in USD regardless of what currency your broker account is in?

b.) If I have an AUD broker will they convert to/from USD very time I buy/sell? If so do they charge an FX fee each time they do this?

c.) If I have a USD broker will trades be in USA and therefore I will not pay any FX fees?



3.) Is having a USD account good or bad for me in Australia?



4.) Stake and Selfwealth both say I own shares In my name

a.) What happens if Sake (US broker) goes bankrupt and I cannot access their website, phone etc… Is it possible to claim my assets from a 3rd party E.g US exchange, DriveWealth etc…?

b.) What happens if Selfwealth (Aussie broker) goes bankrupt and I cannot access their website, phone etc… Is it possible to claim my assets from a 3rd party E.g ASX exchange?

I’m not interested in claiming the insurance they have for brokers, instead I’d prefer just to have my shares back.



My #1 concern is safely of my assets if a broker goes bust.

5.) Does having your assets in your name insure you get them back even if your broker goes bust?

6.) Which one do you think is safer US broker Stake or Aussie Selfwealth?

7.) If something bad happened to stake will I need to go to USA to make claim on my assets?


8.) Theft

a.) Is having stock AAA in your name the same as having your car in your name? For example if someone steals stock AAA it this the same as someone stealing your car (theft)?

b.) If so then could you just go to a 3rd party like the cops and say hey this guy stole my car/stock AAA here is my proof of ownership get it back for me? Does the stock market work like this?


9.) Sake VS Selfwealth VS Other, Which broker do you like and why?



Cheers mate

 

[HelloU]

selfwealth is chess sponsored .... that may be something to understand.

 

[jono543]

Thank for reply, Based in google search "CHESS (Clearing House Electronic Subregister System)" reference: https://www.commsec.com.au/support/frequently-asked-questions/1073.html


- Do you know what the difference is between the Aussie CHESS brokers and the US brokers?

When I search google to see how the US brokers work, I can't seem to find anything related to CHESS instead it tells me that a bank is a custodian for US brokers, So I'm guessing the US has a different system to Aussies.

 

[HelloU]

OP is so full of twists that a simple answer is not possible .....so .......chess is a purely aussie thing ....for aussie stocks only ....... but if ur #1 is "safety" then for aussie stocks chess is ur ONLY option (unless u own a law firm). The word beneficial basically means that u do not own the asset (or at the least it is 'complicated').

That safety may, or may not, apply to 'cash' held by the broker though. That depends on the structure surrounding that 'cash'.

hope that helps

 

[jono543]

Thanks HelloU,

The Aussie stocks chess sounds safer. I'll be trading mostly international ETF's,

Do you know if the aussie stocks chess rules apply too the international ETF's I buy?


Thanks u rock

 

[HelloU]

chess is for asx listed stocks only - purely an australian thing. it allows the transfer of ur asx holdings to another broker if the first goes broke (without having to engage lawyers). It also allows u to see (and 'communicate' with) the shares in the australian share registry for same (link, boardroom, automic etc)

on etf's: u can buy/sell very similar with local brokers on the asx using blackrock/betashares etc listings if looking at international etf's but not wanting the whole international broker thing, but up to you how much 'learning' u can handle in one mouthful.

 

[jono543]

I if I go with the US broker stake (DriveWealth) do you think I can also transfer my holdings to another broker with out having to engage lawyers?


I'm assuming I should also be able to transfer them in the US because the assets will be in my name.

If I can transfer them then this would make me feel safe enough to use the US one because they have less fees

 

[So_Cynical]

Put the US aside for a while, open a SW account and buy some Aussie stocks.

 

[peter2]

This dabble in the stock market has disaster written all over it.

Perhaps I should include my reasons.

If you're worried about costs of brokerage... IMHO you don't have enough capital to trade.

If you're having trouble deciding which broker to use, how are going to decide which stock to buy and when to sell?

 

[jono543]

I been investing in mutual funds for years but for those years I've taken a very passive approach simply just re-balancing maybe once a year if that.


I've sold my investment house and I'll get a low 6 figures profit from the sale to add to my invests soon.

I want to start learning to trade and take a more active approach because I want to understand and control my own investments.

By active I mean dual momentum rotation using ETF's so It'll only be few trades a year about 3-10 is my guess.

Also I'm only going to start trading with a very small amount for a while and then once I get my confidence up I'll add the rest of my funds to it.


It's not that I'm so worried about cost it's that I would like to understand both Aus and US brokers in terms of claiming my assets without a lawyer when SHTF.


I now know that I can claim assets with the AU broker (thanks HelloU).

However I'd also like to know If I can claim assets with the US broker, If the assets are in my name in the US broker stake then I assume I should also be able to claim the assets without lawyer, and if that's the case then I see no reason why should not consider using them. Or maybe even using both of them.

When I started looking for a broker I Automatically was going to only go for an AU broker simply because I'm Aussie. But now after some research I'm think it would be wise for me to at least consider a US one like stake.

 

[HelloU]

I now know that I can claim assets with the AU broker (thanks HelloU).

not sure what u mean by "claim assets".

to clarify: some aussie brokers do not use chess for asx (so they are the registered owners of ur aussie shares) and if they go t1ts up u may need a lawyer.

chess makes you the registered legal asx share owner with the share registry (not the broker as the registered owner) so if the broker goes t1ts up u can move them to another broker. The cash balance is another matter if ur aussie broker goes bust - some brokers use 'bank' accounts, other brokers do not, and some brokers do not even hold it as cash (they transfer it into other products).

when this is not simple for a new trader in the country u live in, and pay tax in, i do not understand why the words united states keep coming up - just tryin to help (as are the others).

 

[jono543]

Thank you for letting me know because I didn't know that some brokers don't do chess.

According to the SelfWealth FAQ "all shares brought through SelfWealth are CHESS sponsored."

So I'll sign up to SelfWealth soon, Don't need an account for a few weeks but I'll sign up early anyway because they'll probably want to do verification etc... (Then maybe later I might try stake but I think I'll use SelfWealth as my main account because of Chess)

By claim assets I mean stocks and ETF's.

chess makes you the registered legal asx share owner with the share registry

- Is this https://www.asx.com.au the share registry were I can login, see my shares and do a share transfer without my broker if I need?


Thanks for all your help, You rock

 

[bellenuit]

- Is this https://www.asx.com.au the share registry were I can login, see my shares and do a share transfer without my broker if I need?

The Share Registry will vary depending on the Australian shares you buy. The big ones are Compushare and Link Marketing Services. When you buy shares you will usually get a letter from the Share Registry for that company's shares a few days afterwards asking you to supply details like Bank Account for Dividends and your Tax File Number (though in most cases these will have been supplied already to the Share Registry by your broker). You can usually see the shares that are held in your name by the share registry by supplying some identification details each time you want access, but you can open an account with them which makes it a lot easier (it costs nothing to open an account, but you are able to access your holdings with just a userid and password).

If you want to transfer shares to another broker, you usually do it through the broker you are transferring to. They will have an online form and you indicate the holdings you want to transfer and the current broker (or your HIN with them) who these shares are held with. You will have a unique HIN, Holder Identification Number, with each broker which is where CHESS comes in. They will do the rest.