Author Topic: Minimizing brokerage fees Australia  (Read 3997 times)

Aussie

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Minimizing brokerage fees Australia
« on: February 10, 2014, 03:45:45 AM »
I am looking to buy maybe $5,000 worth of Vanguard/iShares ETFs on the ASX and hold them indefinitely.

I was considering using Commsec because I can get $600 free brokerage for signing up.  Is this actually a good deal, or am I missing something here?

I was also looking to start buying some shares with every pay packet, but the brokerage even with Interactive Brokers at $6/trade seems like it would add up really quickly.  What do regular share investors do in order to reduce their brokerage?  Save in cash and then only make a few purchases a year?

bigchrisb

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Re: Minimizing brokerage fees Australia
« Reply #1 on: February 10, 2014, 03:36:38 PM »
I save in cash and purchase in blocks of a ~$5000 minimum.  That way, even with the full price online brokers transaction costs are less than 0.5%.  When I started out, this means I didn't buy all that often.  As my income and dividends rose, I'm now saving/investing ~$10k/month, so monthly purchases work out OK brokerage rise.

If you have a low balance, beware the minimum monthly spend with IB.  If you have a really low balance it may be an impediment to you.

marty998

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Re: Minimizing brokerage fees Australia
« Reply #2 on: February 11, 2014, 01:58:47 AM »
Brokerage is just the price you pay for access to the sharemarket. You pay 0.1% with Commsec.

With Property you pay 4.5% stamp duty on every purchase.

Small price to pay, just gotta suck it up and buy in bulk to lessen the impact.

BattlaP

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Re: Minimizing brokerage fees Australia
« Reply #3 on: February 12, 2014, 01:54:46 AM »
Just posted in another thread, I used the nabtrade promotion (20 free trades) to shift 30K+ into ETFs.

There's no catch, just gotta use it within 60 days.

My plan is to use up all these nab ones, save for another year or so and then find another promotion (hopefully commsec) and repeat.

Aussie

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Re: Minimizing brokerage fees Australia
« Reply #4 on: February 12, 2014, 04:08:28 PM »
Great advice!  Couple more questions about these online brokerages:

1) ETFs/Shares will pay dividends... if I use an Online brokerage like Commsec, where do these get paid?  Do I have to pay more brokerage to reinvest them?

2) Eventually I will want to sell shares... do I have to use the same brokerage to do this?  Is it generally just a $30 fee to sell, or are there a bunch of other hidden fees?

3) I know that all the tax stuff gets tricky with dividends/franking credits/capital gains.  Does the brokerage generally provide an annual tax statement, or do I have to work out all the stuff by myself?

AdrianM

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Re: Minimizing brokerage fees Australia
« Reply #5 on: February 12, 2014, 06:02:36 PM »

1) ETFs/Shares will pay dividends... if I use an Online brokerage like Commsec, where do these get paid?  Do I have to pay more brokerage to reinvest them?
You update your holding details through companies like computer share and boardroom. When you buy you will be sent a holding statement from the share registry, this has the details you need to update your details.
http://www.computershare.com/au/business/cis/Pages/Investor-Services.aspx

2) Eventually I will want to sell shares... do I have to use the same brokerage to do this?  Is it generally just a $30 fee to sell, or are there a bunch of other hidden fees?
No you don't have to, but you generally will as the transfer fees to change brokerages are generally more than the brokerage fee.
Most discount brokers are $15 a transaction so $15 to buy, $15 to sell.

3) I know that all the tax stuff gets tricky with dividends/franking credits/capital gains.  Does the brokerage generally provide an annual tax statement, or do I have to work out all the stuff by myself?
The brokerage will send you an annual report showing all of this.

bigchrisb

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Re: Minimizing brokerage fees Australia
« Reply #6 on: February 12, 2014, 07:05:51 PM »

2) Eventually I will want to sell shares... do I have to use the same brokerage to do this?  Is it generally just a $30 fee to sell, or are there a bunch of other hidden fees?
No you don't have to, but you generally will as the transfer fees to change brokerages are generally more than the brokerage fee.
Most discount brokers are $15 a transaction so $15 to buy, $15 to sell.


I've had a slightly different experience with transfer of shares.  The type of transfer makes a big diffference.   I have moved shares (held by the same person) between different sponsoring brokers at zero cost (check the fine print of your own broker!).  As there is no change in owner, this does not trigger a capital gains event, and has let me shop around brokers. 

However, if undertaking an off market transfer (e.g. moving the assets to a different shareholder), then fees are payable (more than brokerage would be) and its a capital gains event.

DaKini

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Re: Minimizing brokerage fees Australia
« Reply #7 on: February 14, 2014, 01:52:06 AM »
I have a similar problem but decided to open a separate thread about it:
http://www.mrmoneymustache.com/forum/investor-alley/invest-monthly-or-quaterly/

The main reason is that i currently have a 3% daily cash account until september that i currently use to stack my to-be-invested-savings.
I'm curious if it would be better to invest monthyl to be able to get the capital gains of 2 months average.

marty998

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Re: Minimizing brokerage fees Australia
« Reply #8 on: February 14, 2014, 03:32:27 AM »

3) I know that all the tax stuff gets tricky with dividends/franking credits/capital gains.  Does the brokerage generally provide an annual tax statement, or do I have to work out all the stuff by myself?
The brokerage will send you an annual report showing all of this.

Are you sure about that? Managed Funds will give you an annual tax statement and one on redemption. Shares you get div statements but have to keep track of your own cost base, purchases, DRPs, tax deferred income etc.

AdrianM

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Re: Minimizing brokerage fees Australia
« Reply #9 on: February 17, 2014, 04:06:57 AM »

3) I know that all the tax stuff gets tricky with dividends/franking credits/capital gains.  Does the brokerage generally provide an annual tax statement, or do I have to work out all the stuff by myself?
The brokerage will send you an annual report showing all of this.

Are you sure about that? Managed Funds will give you an annual tax statement and one on redemption. Shares you get div statements but have to keep track of your own cost base, purchases, DRPs, tax deferred income etc.

I use Bell Direct as my discount Aussie broker and I get it all in a single report come tax time.