Summary
The buying and selling of company shares on stock exchanges or through brokers are known as share trading or share dealing. An investor who purchases shares would become a part owner of the business and might be eligible for dividends. Traders can open a cheap share dealing account with a broker such as eToro. There are different types of these accounts available to Australian clients: each offers its own benefits and disadvantages, so it is advisable to pick the one that best suits your needs. They include Individuals Saving Accounts, General Investment Accounts, Self-Invested Personal Pensions, and online CFD/share dealing online accounts.
There are a few factors that every individual, regardless of the type of account they wish to go for, must take into account before finalising their decision. On the other hand, a trader can use stock derivatives like contracts for difference to acquire exposure to stock price swings without owning the company’s shares (CFD). Without owning the underlying asset (a share), a trader can buy a CFD on a certain share and speculate on the price difference between starting and closing the position.
The cheapest Australia share dealing accounts have different reviews on Quora and Reddit. There is also a section with frequently asked questions on these account types.
The buying and selling of shares through an online broker is known as online share dealing. Tons of brokers allow traders to get involved in share dealing. For this purpose, brokers have introduced online trading platforms. In online share dealing, the traders are exempted from making any visit to the broker’s office; all they need to have is a desktop or mobile device to access online share dealing platforms.
Buying shares is generally considered to be good investment advice. One way of dealing in shares is buying/selling them yourself, but the other easier and cheaper way is to open an online share dealing account with your preferred choice of broker.
Once you’ve verified your account, you can use the platform’s database and search tools to find the share that you’re looking for. To buy them, you simply place an order for them. The brokerage buys them on your behalf. This can be advantageous in the sense that you can now own fractional shares, which are far cheaper than full shares. However, legally they are owned by the brokerage platform through which you purchased the shares or another authorised company – although you do earn the title of “beneficiary owner”.
Traders can follow these steps to open an Australian share dealing account.
- Select a Broker
- Create a Share dealing account with your selected broker
- Verify Your Identity
- Link Your Bank Account Details
- Deposit Funds
- Select your Favourite Shares
- Start Trading
The following are the different types of share dealing accounts available to Australian clients:
Individual Savings Account (ISA)
If you’re over the age of 18, you can open an Individual Savings Account (ISA), which is categorised as a type of retail investment that frees the owner of any income tax or capital gains tax on the returns made. If you’re interested in dealing with shares, the specific kind of share dealing account you should be looking at is the stocks and shares ISA.
When using this type of Australian share dealing account, you can choose to either invest your money in funds (a great way to diversify your portfolio, as investments across different financial instruments are made) or do your own research and purchase shares of one or many companies with the fund in your account.
Self-Invested Personal Pension (SIPP)
In simple terms, this kind of share dealing account enables individuals to accumulate wealth over time, and then use the funds for retirement. More or less like your standard personal pension, the only glaring difference here is that you get to pick and choose your investments; some of the areas you can invest in include Domestic and Overseas company shares and Open-ended investment companies among many others.
Please note that for beginner investors, it is recommended they hire qualified financial advisors to manage their SIPP accounts.
General Investment Account (GIA)
Personal Pensions and Individual Savings Accounts are tax wrappers, while funds stored in General Investment Accounts usually are tax-free until they reach a certain threshold, after which all gains are subject to tax.
The best thing about these accounts is that there’s no upper limit on the amount of money you are allowed to contribute.
Online Trading/CFD Accounts
All you have to do to get started is open an account with a broker, and get verified by fulfilling the broker’s specific requirements. After that, you can easily use the broker’s desktop or mobile-based trading platforms to place orders for your choice of stock. Remember that these stocks are purchased by the brokerage firm from stock exchanges on your behalf.
Australian share dealing account has both pros and cons. Some of them are listed below.
Pros
- Easy Access to the Stock Market through Fractional Share Dealings
- Low Fees
- No Entry Hurdle for Investors through Fractional Shares
- Ability to Purchase a Portion of High Priced Stocks
Cons
- Sell Limits on Fractional Shares by some Brokerages
- Additional Costs charged by Brokerages
- Difference in Share Dealing Policies from Brokerage to Brokerage
Here to help you in your journey to find the cheapest Australia share dealing accounts, we have listed down and explained a few factors that every individual, regardless of the type of share dealing account they wish to go for, must take into account before finalising their decision.
Fees and Commission
You’re already paying in full for the stocks or shares, then why must you incur hefty fees on those purchases? It is wise to read the fee policy of the firms before opening a share dealing account with them – for example, eToro (a licensed brokerage firm in Australia that allows users to open a standard online trading account with them) charges no commission fees at all on the purchase of domestic and international shares alike. Since the commission is usually the greatest cost associated with Australia share dealing, it is best kept to a minimum.
There are other kinds of charges, including deposit/withdrawal, overnight, and inactivity fees, that may be incurred. Additionally, taxes can also significantly impact the size of your investment earnings so one must take great care to work with commission free brokers to minimise them as much as possible.
Investment Selection
The next factor to consider is the number and types of investments each respective Australia share dealing account offers. Lots of banks and financial companies hosting these accounts have their own set of restrictions on the kind of investments account holders can make – therefore, it is crucial to make sure that all the corporations and/or areas of interest are approved by the firm beforehand.
Brokers like eToro also provide all the details of their financial instruments on their respective websites. For instance, eToro has over 3,000 assets on its trading platform, opening up huge opportunities for its clients to diversify their portfolios.
Trading Platform
Finally, Australia share dealing accounts have the most intuitive, up-to-date trading platforms on par with the industry’s latest standards. More than that, these trading platforms will be available to users both on mobile and desktop. They have features prioritising both user-friendliness, such as navigation tools and customizability, like advanced charting for seasoned share dealing account holders.
Below are some of the more significant fees charged by the top share dealing accounts:
Trading Fees
As suggested by the name, this kind of fee is incurred when you place a buy or sell order on a financial instrument, for example, shares in this case. It encompasses primarily two kinds of fees: commission and spreads. Commission, as discussed earlier, is a small percentage of the order collected by firms. However, while most brokers charge this, some brokers may choose to offer the cheapest Australia share dealing accounts that waive such fees.
Additionally, spreads simply represent the amount that makes up the difference between the buy and sell prices of an asset and can be either fixed or variable.
Platforms Fees
Share dealing accounts such as Individual Savings Accounts, Self-Invested Personal Pensions, and Online Trading Accounts can all be set up online now and individuals are given the liberty to manage all their investments from a common platform. Those running these platforms, consider it appropriate to charge users a recurring subscription fee for the usage of these platforms – this is widely referred to as Platforms fees. In Australia, some share dealing account holders also pay a one-off flat fee deemed as a “Setup fee”.
Fund Charges
This fund charge, sometimes called the “entry charge,” is paid when you invest in a fund. This includes setup fees or administration fees. This varies from account to account. For instance, eToro has no administration fees.
Overseas Dealing Charges
Sometimes executing orders on international shares (also known as overseas shares) may result in extra costs because their regulatory framework surrounding financial instruments is vastly different compared to Australia’s.
Australia Share Dealing Accounts can be accessed and used to trade through trading platforms. The traders can choose between proprietary platforms and the MT5 trading platform. Both have their features and specifications.
Proprietary Trading Platforms and Apps
Traders can choose a proprietary trading platform for online share dealing in Australia. Brokers offer proprietary trading platforms to their users to enjoy the special features. They are designed to cater to the needs of the traders in the best way possible. Proprietary trading platforms are also available on mobile devices. All that traders need to do is to download the Mobile App. The mobile trading apps can be downloaded on both Android and iPhone devices. For instance, eToro offers a proprietary trading platform with a user-friendly interface and cutting-edge technologies. The features provide a lot of ease for the clients. eToro offers a mobile application too. The broker supports user-friendliness, by introducing features such as navigation tools and customizability, like advanced charting for seasoned share dealing account holders.
MT5 Platform and App
When installing a desktop terminal, the MetaTrader 5 Online Platform is the ideal choice. It permits share dealing using whatever browser. It works on all operating systems, such as Linux, Windows, Mac. Use the complete capability of MetaTrader 5 on the web to analyse financial markets and place orders. Only an Internet connection is required. It is possible to engage in share dealing without even a desktop computer. The only thing you have to do is download MetaTrader 5 for either iOS or Android and install it on your phone or tablet. The whole range of trading functions is supported by mobile applications, which also let you check your trading history and perform extensive analytical tasks using chart patterns and graphical objects.
The minimum investment depends on the platform or the broker you choose. eToro offers the cheapest Australian share dealing account with a minimum investment of only $10. The fractional shares can be selected of whatever size the trader wants above $10.
The buying and selling of company shares on stock exchanges or through brokers is known as share trading or share dealing. The share dealer gets ownership in the company and might receive dividends too. Traders have the option of investing in CFDs where they don’t own the shares but benefit from price differences between the closing and opening of the CFD position. eToro offers CFD standard accounts where you can trade real shares and shares CFDs. Capital.com offers only CFD standard accounts to its clients.
Share dealing only involves trading within the stock exchange opening hours, while CFD shares can be traded 24 hours a day. With CFDs, traders can speculate on a stock’s price falling, whereas with shares dealing, there is only one possible direction and that is going long. Leverage is possible with CFDs, which can increase both gains and losses. More markets, including indices, commodities, currencies, and futures, are accessible through CFDs. Stocks and ETFs are the only instruments that can be traded in shares (ETFs). CFDs are a trading product, whereas share dealing is regarded as an investment instrument.
The fees on Australia share dealing accounts largely include spreads and commissions. As was previously explained, commissions are small portions of an investment that brokerage firms keep for themselves. While most brokers impose this cost, others may decide to provide inexpensive share trading accounts that don’t charge it. eToro has a zero commission policy so it doesn’t charge any commission. The spread depends on the share you choose. There might be some other fees that apply.
Reddit and Quora users have a lot to say regarding the Australian share dealing accounts. Here are some of their comments below.
Reddit has plenty of reviews on just anything in the world, it serves as a platform to share reviews and experiences regarding anything. A Reddit user advised a member to read the ASX history, how the market works there and the instrument you are dealing with. This will help better understand the basics. Other than that, you will be able to assess your risk tolerance and then plan your trade.
Quora
People on Quora are interested in share dealing in Australia. A member came up with a question to begin share dealing with no prior knowledge. The comments in the reply were more of an advice. He stated that the more your financial knowledge and information from your circle, the more suitable broker you could choose. Always set your risk tolerance before investing. If you rush you will be at risk.
Bottom Line
Share trading refers to the buying and selling of company shares on stock exchanges through brokers. With a broker like eToro, traders can open a share dealing account. Clients from Australia can choose from a variety of accounts, each with its own pros and limitations. So it’s better to choose the one that best meets your requirements. Individual Savings Accounts, General Investment Accounts, Self-Invested Personal Pensions, and online CFD trading accounts are the various types of accounts for share dealing in Australia.
When making a decision, every person needs to consider a few things, regardless of the kind of account they want to choose. Contrarily, a trader can gain exposure to stock price fluctuations without owning the company’s stock by using stock derivatives like contracts for difference. While trading a CFD, the trader does not own the underlying stock. Buying and selling through these types of accounts in Australia involves some fees in the form of spread and commission; however, it depends mostly on the chosen broker.
Furthermore, there are a lot of reviews on Quora and Reddit about these accounts. Some of them have made a part of this article to help traders get a better understanding of the cheapest Australian share dealing accounts.
Q & A
eToro and Capital.com are the best share dealing platforms in Australia.
Yes, share dealing is legal in Australia.
Individual Savings Account (ISA) is the best share dealing account in Australia.
Online CFD/share trading accounts are good for beginners.
There are no share dealing accounts that are completely free online, but there are accounts with no commissions and less fees.
The best way to compare share dealing accounts in Australia is to compare their fees and accessibility.
No, share dealing in Australia is not tax free.
Yes, they are taxable. The 15% of super investment earnings and 10% of capital gains are taxed.
The top share dealing accounts are ISA, GIA, SIPP, and online trading accounts.
Share dealing account is the account that a trader/investor creates on a broker to buy/sell shares.
