Interactive Brokers is a share broking and investing platform for New Zealanders, specialising in US stocks.

It's best suited to investors with a higher net worth who can afford to make large orders.

With a flat $3 brokerage fees, any small orders can become costly and you will lose a large percentage of your capital on fees.

Here's a quick breakdown of the good and bad:

In this article we will elaborate on these points and break down exactly how Hatch measures up when it comes to fees, value for money, ease of use and available features.

Who is Hatch?

Hatch is the retail arm of FNZ, a wealth management company based in Wellington.

It was founded by 4 Kiwi entrepreneurs, but was later taken over by FNZ reportedly for $40 million NZD.

FNZ the platform has transacted over $2 billion NZD in investments, with over 130,000 users.

What Do They Offer?

Hatch specialises in US stocks.

This means there are no NZ/AU stocks traded on the platforms, and no other derivatives like options or futures.

It's a broker for US stocks only.

What Are The Fees?

The fee schedule for Hatch is a flat $3 for all orders up to 300 shares.

After that, it's 1 cent USD per share.

As an example, if you bought 301 shares of Coca Cola at $60 per share, it would cost you $3.01 in brokerage fees ($3 for the first 300 shares, and 1 cent for the additional share).

They also have a 0.5% forex fee.

Whenever you deposit NZD into your account, it is automatically exchanged to USD at the current rate, plus 0.5%.

Finally, Hatch also offers kids accounts, which have a flat brokerage fee of 50 cents for 50 shares, and then 1 cent per share thereafter.

You can see their full pricing schedule here.

How Do I Fund My Account?

Funding your account can be done with a basic internet banking transfer from any NZ bank.

You will be given an exchange rate.

If you're happy with it, go ahead and make the deposit with the provided reference.

Once the NZD hits your account, Hatch will exchange it to USD automatically for you so you can start investing.

How Do I Get Money Out Of My Account?

Before you can withdraw funds, you will need to sell your shares.

Then, funds can be withdrawn to your bank account at any time.

You will need to convert your funds back to NZD before they can be withdrawn.

Withdrawals are free.

Are My Investments Safe?

Hatch uses a custodial system.

This means the shares you purchase are not held in your personal name, but held by Hatch on your behalf.

Obviously, there are risks to this. However, this is the method many popular sharebrokers use today, such as Sharesies and other fund managers.

When investing with Hatch, your shares are actually held in custody by their partner Drive Wealth - a US broker/regulator.

In the case that Drive Wealth gets into financial trouble, there are protections in place in the US such as Securities Investor Protection Corporation which insures each customer account for up to $500,000 (with a maximum of $250,000 in cash). More details on the insurance you get are here: www.sipc.org.

So are your investments safe? 

I cannot give a definitive yes or no answer, but my personal opinion is they are as safe as they would be with any other NZ broker (such as Sharesies, Interactive Brokers, InvestNow etc).

Keep in mind this custodial system is standard practice for the majority of share brokers.

Do I Earn Interest On My Cash Balance?

Yes, Hatch pays you a modest interest rate on any idle cash balances in your account.

How To Buy And Sell Stocks With Hatch

Let's go through an example order with your Hatch account.

Hit the browse button at the top and bring up the list of companies available.

We can see one of the first on the list is the ever popular Tesla.:

Let's buy a few shares.

Once I've clicked into Tesla I will click the Buy button, which gives me my options:

I will select "limit order", which allows me to set the price I wish to buy the shares at.

Now, we'll order 4 shares at a limit price of $225:

Now all that's left to do is click Confirm, and our order is on the market!

Verdict on Hatch

Both the upside and downside of Hatch is in its simplicity.

It's fantastic at what it does, but unfortunately it doesn't do much.

As a broker for exclusively US stocks, its usefulness is limited to most investors in NZ.

Not to mention, it only does stock trading, so if you wanted to trade anything else on the US market, such as options, it lacks that functionality also.

That said, the interface is a joy to use and extremely intuitive. 

Personally, I think it has the best user experience of all the brokers in New Zealand today.

The next major downside in my opinion is the fee structure.

Because the brokerage fee is a flat $3, instead of a percentage, it means you can be paying astronomical fees as a small investor.

For example, if you buy $30 of shares, you will still be charged $3 in fees, which is 10%!!!!

This makes Hatch only suitable for investors who buy larger orders.

In my opinion, unless you're buying at least $5k parcels, you're better off going with Sharesies.

Overall, Hatch seems to be a brokerage suitable for a very niche investor (investing in only the US, in large amounts).

Even then, Sharesies has a flat $5 brokerage fee on US purchases, and with NZ and AU stock availability on the platform too, it's a much more versatile option.

I personally don't use Hatch, as I use Interactive Brokers (review here) for all my US investing, mainly because it allows more functionality, for example, selling covered puts and covered calls.

While Hatch offers a great platform for anyone who decides to use it, I believe Sharesies and Interactive Brokers are more useful options available to New Zealanders.