With Selfwealth launching its US trading solution, I thought it would be timely to open my trusty spreadsheets and undertake a SeflWealth versus Stake comparison of brokerage fees and costs.
SelfWealth US Stock Trading
As this service has just been launched, I’ve not had an opportunity to test the US trading functionality itself. The information I’ve used is exclusively limited to the information SelfWealth has published on it’s website: SelfWealth – US Trading Coming Soon.
In regards to the fees that SelfWealth will charge for it’s US trading, they are as follows:
- USD $9.50 per trade
- FX spread – 0.60%
This means if you wanted to purchase USD $5,000 of shares in Google from Australia the fees would be:
- Brokerage USD $9.50 + $30.00 FX [$5,000 x 0.60%] = USD $39.50
SelfWealth versus Stake Fees
Unlike SelfWealth’s US trading solution, Stake has been up and running for a number of years and I’ve personally used Stake via an individual account as well as through my SMSF.
My analysis assumes the Stake Bank Transfer option is used, which has the lowest FX spread from Stake of USD 0.70% rather than the higher fee POLi and express funding options. You can see Stake’s brokerage and FX fees here.
All analysis is conducted in USD for consistency.
If you are doing a single trade (i.e. one BUY trade of a single US stock) the SelfWealth vs Stake fee comparison is as follows:
As the above Selfwealth vs Stake comparison table shows, for any trades of around USD $10,000 or less, Stake is comparatively cheaper. The reason for this is that although Stake’s 0.70% FX spread is higher compared to SelfWealth’s 0.60% FX spread, Stake has $0 brokerage on trades.
Therefore until the additional 0.10% FX cost equals $9.50 – i.e. the transfer and subsequent trade is over USD $9,500, Stake will always be cheaper. Simple maths.
The numbers change quite a bit once you start making more trades. Both SelfWealth and Stake only charge the FX fee when money is first moved from your AUD bank account to your US trading cash account / wallet. You can then use that USD to buy and sell as often as you like. Both SelfWealth and Stake enable you to trade on unsettled funds (from sales).
The following compares the total cost of transferring funds to the USD trading account then (over time) making 5 trades using that cash:
As you can see, the fact that Stake does not charge any brokerage commissions on trades starts to add up compared to SelfWealth. If 5 trades are made using the funds transferred from AUD to USD, It’s not until you transfer more than USD $47,500 (AUD $63,000 at the spot FX rate at 17/12/2020) where SelfWealth becomes more cost effective with the slightly lower FX fees of 0.60%.
If you expect to make 10 trades, then the amount you need to transfer needs to be higher again (USD $95,000) to benefit from the slightly FX spread fees.
SelfWealth versus Stake – best option?
Purely looking at the SelfWealth vs Stake FX spread and brokerage fees in isolation, the best option assuming you want the CHEAPEST total cost of trading will depend on the following:
- How much you will be transferred AUD > USD; and
- How frequently you expect to trade
Here are my recommendations based on various scenarios:
- Smaller amounts transferred (less than USD $10k) regardless of trading frequency: Stake
- Larger amounts transferred (up to USD $50k) regardless of trading frequency: Stake
- Larger amounts transferred (USD $50k or more) with low number of trades (under 5): SelfWealth
Realistically, when looking at SelfWealth vs Stake, the only scenarios where SelfWealth would come out on top (again, purely on a FEES basis) is where an investor transfers a single, large amount (i.e. $50k or more) and makes a limited number of purchases. For example if a passive SMSF investor wanted to invest USD $100k into a small number of low cost ETFs that they would likely hold long term, the slightly lower SelfWealth FX fee would marginally outweigh the USD $9.50 broker fees incurred.
SelfWealth vs Stake vs CommSec vs NABTrade vs Saxo for US stocks
Stake has put together the following handy comparison of their costs and fees compared to other market players:
- Do you value the convenience of having both your Australian shares and US stocks under the one platform?
- What other fees / costs might be incurred?
- Can you purchases fractional shares?
- How functional is the platform?
- How long does money take to get from the AUD account to the USD account to be available to trade?
- How good are the mobile trading apps?
- Is there good quality support and customer service?
- Do you have to manually fill out a W8-BEN (or W8-BEN-E form for entities)?
- Does the provider offer complimentary services like SMSF set up and administration?
One key factor with Stake is that they have a significant customer base of more than 160,000 across Australia, NZ, UK and Brazil and have been able to deliver access to the US market with $0 commission on trades. Stake could easily provide ASX access at a low cost – likely not at $0 due to the unavoidable structure of the ASX and CHESS – but could easily undercut SelfWealth.
Another potential concern for SelfWealth is that their underlying ASX broker that executes the trades – OpenMarkets – themselves have a direct to consumer model – OpenTrader which actually undercuts SelfWealth with $5 brokerage on ASX trades of under AUD $5,000.
Similarly Stake could also implement a tiered FX structure to encourage investors (namely SMSFs) with larger tranches of cash to invest in the US market.
There is no wrong answer when choosing between SelfWealth versus Stake. Why not test both and decide which one you like?
The following pages and articles may also be of interest:
- Buy US stocks using your super with Stake
- Stake SMSF solution
- Open a Stake account and receive FREE stock
- SelfWealth SMSF solution
- Register with SelfWealth – 90 day premium trial + 5 x free trades
- Superhero – $5 share trades review
Interested in setting up an SMSF?
The following pages provides more information on how you can establish an SMSF: How to set up an SMSF
If you have any questions please contact Grow SMSF.