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Chapter 1: What is a brokerage account and why do you need one?
Property investors often talk about using debt to build wealth. In the share market, that's called gearing. With the BetaShares WealthBuilder range, investors can access moderate gearing into shares, and with the newly launched GG-BL, That means exposure to a diversified portfolio of around 1,300 global companies excluding Australia, all with no loan applications, credit checks, or margin calls.
Gearing magnifies both gains and losses, so it's only suitable for investors with a very high tolerance for risk. You can learn more about the WealthBuilder range of ETFs at the BetaShares website. And don't forget to read the PDS and TMD to decide if it's right for you. BetaShares Capital Limited is the issuer.
Here's something worth knowing if you've been meaning to make the switch to a better broker. To celebrate their fifth birthday, Perla are offering three free trades a month for five months if you transfer your portfolio across with a minimum of $1,000. For anyone investing regularly, that's meaningful savings on brokerage that can stay invested instead.
Perla is chess-sponsored, built specifically for long-term investors, and now has over $3 billion invested on the platform. If you've been with a platform that doesn't quite fit your strategy anymore, it might be time to take a look. You'll find all of the details at perla.com slash LP slash Rask. That's perla.com slash LP slash Rask. Thanks for tuning in to today's podcast.
Please remember that all of the information in this podcast episode is limited to general information only. That means the information is not specific to you, your needs, goals, or objectives. So you should seek the advice of a licensed and trusted financial professional before acting on the information.
And before you acquire or apply for a financial product, please read the PDS or product disclosure statement, which should be available on the issuer's website. Lastly, please keep in mind that past performance is not indicative of future performance. G'day, Kate Campbell.
How are you going? Good, thanks, Owen. Good to be back on a nice sunny Melbourne day in lockdown.
Yes, it is indeed. Actually, it's a beautiful day now that I look out the window. What are we talking about today?
We're talking about a topic that is very popular at the moment in our Facebook community and in various other Facebook communities that I have a bit of a lurk in, which is brokerage accounts. And I think that people are more interested now in what brokerage account to choose almost than what ETF to buy, which is quite fascinating.
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Chapter 2: What factors should you consider when choosing a brokerage account?
One of the things, Kate, which we just call out for the fee section is the brokerage fee. The brokerage fee is what you pay when you buy and sell. That's automatically taken out. If it's $9.50, you might place a trade for $510 and then you get $500 worth of shares. That's an example.
And it's worth noting you get stuck with the brokerage fee on the way in and on the way out.
Good point. Yeah. The other thing is that what we just talked about, holder identification numbers, if your broker provides that and it's chess sponsored, you will probably pay a little bit more in brokerage fees. The ones that can do it for below $9 are those ones typically that don't offer that service. But a lot of brokerage accounts also offer introductory rates.
So, you know, like five shares for free or five trades for free, those types of things. So you can take advantage of those too. Okay.
And also in fees, just they don't happen as much anymore. And sometimes they're more relevant to international accounts. But there's inactive account fees that sometimes pop up on some of the larger platforms. So that's the point. If you haven't traded for six months on this international account, you might be charged a set fee.
Like an account keeping fee.
Yeah. Yeah. Brokerage platforms make money by you trading. So if you haven't made any purchases or sales for a whole year, they're not making any money off you. So sometimes they do hit you with a fee there.
There also may be fees, as we'll talk about a little later with the international platforms for foreign exchange transfer, like you would pay for other things, but they do vary depending on the platform for moving your Aussie dollars into US dollars to buy US shares, for example.
And some of the larger platforms do have add-on packages for like premium research or premium data or things like that. So depending on what you want, have a look at that when you're researching as well.
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Chapter 3: How do brokerage fees impact your investment decisions?
Whereas say a brokerage account is kind of one where you do it yourself. And a lot of the times you own the individual things underneath. So there are different robo advisors out there that do allow you to own the thing that's actually inside the platform, but they're not,
um as common as you think so go back to our robot bus episode and yeah and i know raise has uh introduced options this year for customizing your portfolio but it's still sort of within a set list you can't just buy and sell anything you want and there's also an account keeping fee to keep in mind so um yeah that
I mean, people like using Raise or some of those other smaller platforms to get started and get comfortable and then maybe move across to a different platform or keep the Raise going and start to invest in a brokerage account directly once they're a bit more comfortable with ETFs and shares.
Yep. Roger from the Facebook community asks, best brokerage account for ETFs if investing regularly? Costs can add up pretty quickly. Yeah, Roger, we can't tell you what you should do, even if you're investing in ETFs. But what we can say is that we get it. Yeah, the fees add up.
If you're putting $500 in and it's costing you $20, not that it is, but if it's costing you $20, that's a big percentage of your investment going just to fees. So we say save up chunks if you can. So save up bigger amounts. So just put it in your offset account or your savings account, $1,000 or $2,000 at a time minimum probably is what I'd suggest.
But there are some brokerages that allow you now to... And effectively, or very low cost, buy ETFs for free. So Perla is the newer, new age kind of brokerage account. And that allows you to buy select ETFs if you hold them for a year without paying the $9 brokerage or $9.50 brokerage. Vanguard's personal investor service, which is also a new one, which has undergone some changes recently.
That allows you to buy their managed funds, which are very much the same as ETFs for no fee, but there is an account keeping fee. And there is also the fee for the actual fund itself, just like any ETF or fund. And finally, then you have things like that are fixed brokerage accounts, a fixed level brokerage, which is a low cost like self-wealth.
These are just some things to consider, but always check the PDS and read the terms and conditions. Even if you're an infrequent investor, maybe it's even more reason to check the details before you kind of sit and forget.
Yeah. Yeah. And I think that's like once you get it, when you're getting started, you might be playing with five hundred dollars.
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Chapter 4: What is the difference between custodial models and HINs?
It just depends. But you can quite easily, if you're willing to pay the fee and do the paperwork, move holdings from one platform to another. But yeah, definitely think before doing it.
It's a good idea to consider the tax implications of doing it the other way, which is some people just sell their shares and then go and buy them again in another brokerage. That might incur tax, whereas in specie, if it's done correctly, can just be a simple swap. Because you still have the beneficial interest. You still own them. You're just holding them somewhere else.
Especially for investors that have been investing for many years now and they might have quite large positions in ETFs or shares. As you mentioned, you might have found a lower cost platform. Someone might be moving from a larger platform to something like SelfWealth. And the in-specie transfer does allow them to not reset their cost base and so they don't incur a tax event.
As long as the entity you're moving one holding to the other holding is exactly the same.
Yep. And also just keep in mind that if you do do a transfer of shares, that... the new broker might not know what you paid for those shares. So if you go to record tax in a few years, you want to make sure that you're tracking what your original cost was. So if you use something like ShareSite, which is a portfolio tracking tool, or if you just log into your own brokerage, your old brokerage,
Take a snapshot of what you actually paid and the cost that you incurred in buying those shares. That's to work out your tax later on. You can do that.
And especially if you've been dollar cost averaging into an ETF and you have maybe 30 purchases of this same ETF over a decade, it is super important that you keep those records for tax purposes at full stop. And then especially if you are moving platforms because it won't keep that transaction history.
Just lump it all into one. Yeah. Because, yeah, in the future, your future self will thank you for having that screenshot. Okay. So, Andrea from the Facebook community, this is, I believe, the last question we've got. Yes. Andrea asks, and she's in the RAS Facebook community, I'm generally happy with my ANZ international brokerage account because I trade infrequently, so not very often.
However, there is an international company I want to invest in on the Madrid Stock Exchange, which is not covered by ANZ or ComSec. Is there any other account that I could use? Yeah, maybe I'll take this one. So Andrea, you could find another broker. There's one called Interactive Brokers or IB. There are minimums as far as I'm aware to use IB. They do charge.
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