The trading boom: we check out the latest platforms designed for savvy young share investors
The number of online share traders has skyrocketed, with new, younger investors taking advantage of the current market volatility due to COVID-19 by opening accounts on new, cheap platforms.
Superhero is the latest online investing platform to join the crowd. Since launching on September 7, CEO John Winters has seen his user sign-ups go through the roof. “I can see a generational shift to a younger demographic. Digitisation has played a large part here but COVID has really sped up the process,” he said.
The aim of online trading platforms is to help put the share market into consumers’ hands without all the paperwork and fees.
Mr Winters considers traditional stockbroking practices to be outdated and said: “Our platform solves a problem I have always seen, it leaves the archaic paperwork behind”.
The other problem solved by Superhero is the cost barrier between young Australians and investing. “A lot of young people feel locked out of the housing market but still want to invest, they can make trades from a minimum of $100 with us,” Mr Winters told Together Australia.
The big banks have also seen enormous increases on their trading platforms. NAB has reported a 360% increase in applications to nabtrade this quarter. Commbank has seen 400,000 new accounts open and the new entry-level Commsec Pocket app was downloaded over 100,000 times in the past year.
A report from the ASX corroborates this data, suggesting that users are creating new accounts and entering the market at a rate 3.4 times higher than usual.
The increasing presence of millennials in the share market has some worried especially following the death of Alexander Kearns, a 20-year-old user of the US app Robinhood.
Kearns committed suicide after misreading his account thinking it was negative $730,165. He left a scathing suicide note asking Robin hood ‘how was a 20-year-old with no income able to get assigned almost a million dollars’ worth of leverage?’.
Mr Winters said: “I can see young people investing to be a very good thing so long as they don’t get carried away with trading too much”.
John and his co-founder Wayne Baskin spent two years developing Superhero, they wanted it to be a modern trading platform without the jargon and the excessive paperwork and fees.
They burst into the market with a bright, playful web presence and a cool $8 million in capital from tech giants like Afterpay and Zip.
Mr Winters said the clear generational shift is “not just a passing blip”.
Outside of the big banks, we had a look into some of the best share trading platforms available at the moment.
Superhero is the newest kid on the block, giving trading a ‘kick up the ASX’. Superhero officially launched September 7 this year and is financially backed by Afterpay’s Nick Molnar and Zip Co’s Larry Diamond. The platform was co-founded by John Winter and Wayne Baskin as a way to make the stock market more accessible, especially to young people.
There is a flat $5 brokerage fee, with trades starting at a minimum of $100 per trade. Superhero offers a basic account for free, or a Live account for $9 a month. The Live account includes the added benefits of advanced orders, live market data and comprehensive tax and performance reporting not offered with the basic account.
Whilst the platform can be used by anyone, Mr Winters has said the platform is especially good “for younger people”. He compared the Superhero interface to that of ride-sharing apps or food delivery apps with a fresh, modern interface.
Joining is fast and painless, a few personal details and proof of identity (drivers license, Medicare card, or passport), and you are issued a payID and reference number ready to fund your account.
We like that Superhero has a jargon-free, user-friendly interface. It is broken down into simple to understand categories like ‘tech heroes’, ‘I love gold’ and ‘cashless society’.
Saxo Capital Markets
Founded in 1992, Saxo Markets is a fully licensed and regulated bank with an online trading platform.
Saxo Capital Markets has three pricing tiers. Customers receive lower prices the more they trade and move between tiers as they gain loyalty points by investing.
The three tiers of Saxo Capital Markets investing are priced at minimum initial investment amounts of $3000, $300,000 and $1.5 million. The large investment amounts suggest the platform is best utilised by older Australians with more experience and more capital to invest.
The sign-up process for Saxo Capital Markets is extensive, they will need all your details almost down to the name of your dog and will ask a myriad of questions to ensure they are offering you the right products.
We like that Saxo Capital Markets offers access to more than 19,000 global stocks on 36 of the world’s major stock exchanges and that a free demo is offered before joining.
IG Share Trading
Established in 1974, IG has more than 239,000 clients internationally and access to over 17,000 markets.
IG made a point of their competitive pricing when they recently announced they will be charging $0 commission trading on global stocks and $5 brokerage on Australian shares.
With such low brokerage fees and a virtual platform to practice on, IG is an ideal place to start out. An argument can also be made that IG is also perfect for people who trade frequently as the brokerage fees are so low and you will save money in the long term.
It took less than 5 minutes to sign up with IG, the process is simple and you can see the end goal as you move through the questions, there is also an option to verify your identity later if you don’t have your passport close by.
We like that IG has an educational demo platform with AUD$20,000 of virtual funds to help new traders understand the market and make informed decisions.
Stake was launched in 2009 by Matthew Leibowitz after he moved from moved from Australia to Chicago and discovered that the amount of money moving through Apple stock was more than twice the entire Australian stock market.
Using a commission free model, Stake boasts $0 brokerage fees, $0 for fractional shares and $0 FX fees on trades. However, as Stake works in the US market in USD, investors need to be aware of the fees that come along with that including transfer and conversion fees and the $5 US tax form fee.
Stake is ideal for those who dream of trading in the Wall St market.
The sign-up process takes just a few minutes, it is very straight forward and easy to navigate.
We like that once you have funded your new Stake account you get a free stock in Nike, Dropbox or GoPro if you fund your account with $100 within 24 hours of joining.
Interactive Brokers Group was founded by Thomas Peterffy, Chairman and CEO in 1977 and is now one of the premier securities firms with over $8.2 billion in equity capital.
This platform is unique in that they offer both fixed and tiered commissions for their shares and ETFS. Fixed rate pricing is the smart options for low volumes of trading and the tiers work best for larger volumes.
Interactive brokers is best for the active trader, this is also why we like it. Interactive Brokers has a wide range of trading tools, such as advanced charting, fractional shares and a long list of conditional order options as well as low brokerage fees.
Joining Interactive Brokers was as simple as entering your email, creating a password and jumping through their username requirement hoops, it took a total of 45 seconds.
Launched by a team of brokers just before the GFC hit, Bell Direct says: “No wankers. No wafflers. No cowboys. Just experts who are the best at what they do and help you make informed decisions”.
Bell Direct works on a framework that offers cheaper brokerage the more you trade. Online trading is significantly cheaper than making your trades over the phone, placing an order over the phone, customers will pay $60 or 0.2%, whichever is greater. This applies to shares, warrants and mFunds.
People who trade often, online, and with amounts over $10,000 should consider using Bell Direct. Frequent traders will receive a discount on brokerage fees, as will those trading over $25,000.
You will need a little bit longer to join Bell Direct and must have your banking details at the ready to fund your Bell Direct cash account. It is not a site you can use to quickly sign up and take a look at the inner workings before you decide to trade.
We like that every now and then Bell Direct run special offers where new customers can invest in ETFs without a brokerage charge, they are running one at the moment until September 30.
Three entrepreneurs started eToro in 2007 in the US to make trading accessible to anyone, anywhere, and reduce dependency on traditional financial institutions.
Stocks traded on US stock exchanges are available to trade with no brokerage fees. Other stocks are offered as derivatives and bear commission. All trades are made in US dollars as eToro trades US stocks.
eToro is great for anyone looking to start out in the US markets due to their copy trading feature, or those who are more experienced as they can also use the feature to earn a second income from users following their moves.
Signing up for eToro took all of 20 seconds, an email, username, password and you are ready to go. It is an ideal sign up process as it lands you right in the thick of it so you can poke around before deciding eToro is right for you.
We like the eToro copy or social trading feature that allows you to automatically copy the trading moves of the eToro trade leaders, or have your moves copied to earn a little extra.
Headquartered in London, CMC markets was founded in 1989 by Peter Cruddas as a Foreign Exchange market maker under the name Currency Management Corporation which was later abbreviated.
CMC Markets offers $0 brokerage for global share trading on US, UK, Canada and Japan exchanges, for all markets outside of this, including Australia there is a standard $11 or 0.1% brokerage fee.
People who have experience in trading and are interested in using all the trading features such as advanced charting, stock watchlist, and conditional orders would be best to use CMC markets.
Signing up for a CMC markets account takes about five minutes, there is a few personal questions and proof of identity, if you take the time to go through and read the five terms and conditions etc documents you say you have it might take a good while longer.
We like that trading tools and features are all included at no extra cost or minimum investment.