Cheapest stock broker in Australia

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This post recommends the cheapest stock broker in Australia, that is, the stock broker that will cost the least for an Australian person or group looking to invest in the stock market. Incidentally, the cheapest stock broker is also an online stock broker, allowing you to trade (buy or sell) stocks online. It is also the best stock broker in Australia for an Australian to use to invest in the stock market.

That best and cheapest stock broker in Australia is Stake, an online stock broker for Australians to use to invest in stocks, but for US stocks.

Why is Stake the best and cheapest stock broker in Australia?

Brokerage fees

Firstly, every single stock broker for stocks in Australian companies cost at least some brokerage fee (a fee just to do the trade). The cheapest fee in Australia is about $8 per trade for normal stocks and most brokers cost even more. So it is best for an Australian to not trade in Australian companies if they want to do a lot of trades. Just doing 10 trades would cost you at least $80 just for doing the trades. If the stock you invested in loses value and becomes lower than your investment, that’s an additional loss on top of the brokerage fees.

Stake has no brokerage fees and only a fee for converting your Australian dollars to US dollars. However, the conversion fee is only 0.70 USD for every 100 AUD (or 2 USD minimum, whichever is higher), so you get whatever the converted amount is minus the conversion fee [1]. It would take a conversion of 725 AUD into USD to equal a cost of 8 AUD. After you convert the money, you can trade as much as you want without it costing you any fees! For 80 AUD you could start trading with up to 7250 AUD for an infinite number of trades, which is far better value.

Minimum trade

Secondly, all trades in the Australian stock market needs to be a minimum 500 AUD value. That is, you have to buy a minimum of 500 AUD of stock for every corporation you invest in, and you need to make sure that investment stays at a minimum of 500 AUD when trading (you can’t sell part of the stock if the remaining stock becomes less than 500 AUD and cannot sell the entire stock if it is less than 500 AUD). Only after the initial 500 AUD investment can you then add smaller investments for that corporation [2]. Adding the cheapest brokerage fee, you require a minimum of 508 AUD for every buy and sell of stocks you make for every company.

In comparison, Stake only requires a minimum of 10 USD per buy of shares, and no minimum keep or sells!

Additionally, for US stocks, you can trade fractional shares, that is, a fraction of shares. For Australian stocks, you have to buy whole number shares. For example, if an Australian corporation had shares valued at 480 AUD per share you would need to buy at least 2 shares at a value of 480 * 2 + 10 = 970 AUD to overcome the 500 AUD minimum investment and to pay for the brokerage to invest at all in the corporation. Furthermore, you can only sell whole number shares as well. Using the previous example, you would need to sell exactly around 480 AUD or 960 AUD worth of shares. However, for US stocks, using Stake, you could buy a fraction of a share valued at 200 USD, for example, with just the 10 USD minimum to give you a 10/200 = 1/20th of a share! And then you could sell as small a fraction of a share as you want too!

Market share

The Australian stock market only makes up about 2% of the world’s stock market, while the US market makes up most of the world’s market about 54% of the world’s market [3]. You would be missing out of 98% of the world by investing in only Australia and pay more to invest in less.

Some exceptions

There are what are known as “binary option trades” which don’t have a brokerage fee, but those are high-risk gamble-like trades where you end up either winning some cash or losing the investment entirely. Such trades are also prone to scams. Advertisements for them have been blocked by the likes of Facebook, Twitter and Google [4].

There is also the trading platform CommSec Pocket where it is possible to invest with only a minimum of about 50 AUD and a $2 brokerage fee, but it is only with limited choices from 7 exchange-traded funds that they selected [5].

Conclusion

In summary, it is best to avoid the Australian stock market and invest in other markets such as the US market, and the cheapest option for investing in the US market from Australia is from Stake at a cost of only 0.70 USD for every 100 AUD to convert the currency and no brokerage fee.