Thinking about using Sharesies as your share broker?
Sharesies is one of the newest share brokers on the scene and offers good value to smaller investors.
Below is a quick summary of the pros and cons of Sharesies compared to the other brokers in New Zealand.
The biggest advantage of Sharesies is it offers good value to smaller investors as their fees are low and they have no minimum order.
In this article we will elaborate on these points and break down exactly how Sharesies measures up when it comes to fees, value for money, ease of use and available features.
Who is Sharesies?
Sharesies is a New Zealand sharebroker that was designed to give smaller investors an opportunity to get into the market.
Before Sharesies, sharebroking was very expensive and the cheapest broker available was ASB, which charged a minimum of $15 per trade.
This meant even if you only wanted to invest $10, you still had to pay $15 per trade, meaning your brokerage fee was 150%!
Sharesies came on the scene in 2016 with a 0.5% brokerage fee with no minimum order, meaning you could invest $10 and only pay 5 cents in brokerage!
This was a game changer for the NZ sharemarket and to be honest, I'm surprised a company like Sharesies didn't arrive on the market sooner.
I still use ASB and IBKR as my personal brokers, but have been using Sharesies for the @moneybren public portfolio since 2020. Since then, Sharesies has changed quite a lot - initially having monthly plans, then removing the monthly plans, then bringing them back, and changing the fee structure multiple times.
However, I still think the platform offers good value for a lot of investors, depending on how you use it.
In this review, I'll walk you through the different options you have when opening a Sharesies account, what your expected fees are, whether your investment is safe, and other general tips and advice to help you decide whether they should be your broker or not.
Sharesies: What Do They Offer?
Sharesies is purely a share investing platform.
They do not offer investments in options, cryptocurrency, margin trading, commodities, bonds, or any other instrument.
What you can invest in are:
- New Zealand shares
- Australian shares
- US shares
- Exchange traded funds
- Units in some NZ managed funds
It is open to residents in New Zealand and Australia, and deposits can only be made in your local currency.
Sharesies Fees: Worth It Or Not?
When it comes to choosing a broker, fees are always number one on my list.
If the fees are too high, I don't even bother looking.
The thing is, Sharesies fees can be both high or low, depending on how you use the platform.
This is because they essentially have two different fee structures: Monthly plans, and Pay as you go.
Let's take a look.
Pay As You Go
If you don't want to subscribe to a monthly plan and just pay fees whenever you buy or sell, it's a flat rate of 1.9% per order.
This is quite high.
If you purchase $100 in shares, for example, you would pay $1.90 in brokerage fees.
That might not sound like a lot, but losing almost 2% on your investment immediately is quite a haircut.
However, it's still a lot cheaper than most other NZ brokers out there when it comes to purchasing individual stocks.
When it comes to purchasing funds, however, there are better options.
For example, InvestNow offers a very broad range of funds and ETFs, and you won't pay any transaction fees when investing or divesting.
Shareses also has a maximum fee, which caps out at $25 NZD for NZ shares, $15 AUD for Australian shares and $5 USD for US shares.
This means if you purchase $50,000 in shares, you won't pay 1.9% of the full amount, which would be $950. Your brokerage fee would be capped at $25.
Sharesies offers monthly plans which cover your brokerage fees for a certain amount of spend, and encourage you to invest regularly:
$3 per month
$7 per month
$15 per month
As you can see, these monthly plans are pretty good deals.
Even on the cheapest plan, you will only pay brokerage of 0.2%, assuming you use your full allowance of orders.
However, you need to be investing regularly if you want to do so.
This is not difficult - simply set your auto-invest orders to match your allowance.
If you're on the $3 plan, you're allowed $1,000 of auto-investing per month, so simply set up your auto-invest to invest $250 per week.
Then during the month, you can also use your remaining $500 of buy/sell orders to your liking.
How Do I Know If The Monthly Plan Is Worth it?
There is a cut off point to where it makes sense to subscribe to the monthly plan instead of paying as you go.
For example, if you only can afford to invest $100 per month, then your total fees for the month would be $1.90.
If you don't plan to invest any more than $100, then it makes no sense for you to go onto the $3 plan.
However, if you invest $300 per month, then your pay-as-you-go fees would come to $5.70. This means it would be cheaper for you to subscribe to the $3 plan.
Where is the cut-off point for each plan?
I've worked it out for you. Generally speaking:
If you invest more than $157 per month, you should subscribe to the $3 monthly plan.
If you invest more than $1,710 per month, you should subscribe to the $7 monthly plan.
If you invest more than $4,421 per month, you should subscribe to the $15 monthly plan.
There is a big caveat here, which is this assumes you are using your full auto-invest and manual buy/sell allowances. Depending on your investing style and strategy, the above figures may differ for you, so it's important to work out exactly what your personal investing timetable will look like and work out the figures for yourself.
Foreign Exchange Fees On Sharesies
Currently Sharesies charges 0.5% on foreign exchange transactions.
This is important to know because if you plan on buying Australian or US shares, you will first need to convert your NZD into AUD or USD.
Keep in mind that when you sell your shares, you will receive settlement in the foreign currency, so to get those funds back into NZD will cost you another 0.5%.
Effectively this means you will need to pay an additional 1% to get in and out of a foreign investment entirely.
While these fees are not gratuitous and are probably similar to what ASB Securities would charge you, they do affect your investment returns so you need to be aware of them.
How Do Sharesies Fees Compare To Other Brokers?
When it comes to investing in NZ shares, your options are thin.
Your only two alternatives are ASB Securities, which as a $15 minimum brokerage fee, and Jarden Direct, which has a $29.90 minimum brokerage fee.
Even at larger amounts, Sharesies will be cheaper than both due to their $25 fee cap.
This means that when it comes to NZ shares, Sharesies is the cheapest broker in New Zealand across the board, for any investment amount.
When it comes to investing in ETFs, however, you may want to consider InvestNow, which offers zero brokerage fees for both investing and divesting. Keep in mind InvestNow only offers funds and ETFs, and you will not be able to purchase individual shares.
Last thing to note about fees is Sharesies has a Kids' Plan which is only $1 a month and gives you access to $1,000 in auto-investing and $500 in buy/sell orders.
I think this is an awesome initiative by Sharesies and even if you just auto-invest a couple hundred bucks a month, your child could have a serious nest-egg by the time they're eighteen.
No other broker in New Zealand offers this service, so I think it's a great option to sign your kids up to Sharesies if you want to start their financial journey early and get them on the right path.
Is Sharesies Easy To Use?
When it comes to UI (user interface) and UX (user experience), I think Sharesies is easily the best platform available for beginners to the sharemarket.
The app is well designed and easy to follow.
The interface is modern and pleasing to use, and they give you some very simple metrics which make it easy to understand your returns and your portfolio allocations.
Starting with your wallet, it acts like any other wallet and shows you balances in your various currencies.
This is important because if you own stocks in different markets, such as Australian or US stocks, you will receive dividends in those currencies.
Your portfolio value changes daily with the market, so Sharesies will show you your total value, plus your basic return and how this return is broken down.
It will also show you how much you've put in, versus how much your portfolio is worth now.
Your positions are displayed in an easy-to-understand way.
It will show you how many shares you own, how much they are worth in NZD, and what your return is (including your dividends).
If you have active buy/sell orders on a particular stock, it's clearly shown.
While Sharesies might not have the most features, it is sufficient for beginner and intermediate investors.
I think they're ideal for investors with portfolios under ~$100k.
Once you get higher than that, you may want to diversify to other markets and need more features, meaning you could start to look at more advanced brokers like Interactive Brokers. However, for a beginner I would highly recommend against using brokers like that, as they will completely overwhelm you with the interface and options available.
Even when you go over $100k, Sharesies is still a perfectly suitable platform for a simple portfolio.
Are My Shares Safe With Sharesies?
Sharesies does not transfer shares into your name after you buy them.
Instead, they use what is known as a custodial system, where they hold shares on your behalf.
Your shares are held in "bare trust" which means you are the beneficiary and Sharesies can only do with your shares what you request them to.
They are also held in a separate entity to Sharesies Ltd, so if anything were to happen to Sharesies, your assets would still be held in trust and be protected in a separate company.
You can read more about their custodial system here.
So are your shares safe?
Personally, I think their custodial system could be better.
While it's true that your assets are held in trust and are owned by you, Sharesies doesn't actually use a proper custodian. They hold the shares in Sharesies Nominees Ltd, which is managed by the same directors as Sharesies.
This means "technically" your shares aren't owned by Sharesies, because they're held in custody by .... Sharesies.
Proper custodial relationships should separate the manager and the custodian, so that the separation is truly bulletproof and Sharesies is completely separate from the assets it manages in custody.
However, as far as I know (bear in mind I am not a lawyer), the protection of your assets is "legally" sound.
My Personal Investment Strategy With Sharesies
Currently I run the @moneybren public portfolio through Sharesies and to keep my fees minimal I use the following approach:
I start off with the $3 monthly plan.
My auto-invests usually come to around ~$200 per week, with the Starbucks Experiment and some other ETFs that automatically get added to each month.
Then if I plan on doing any big buys/sells, I simply upgrade the plan as needed.
For example, if I plan on making a purchase that will go above my $500 allowance, I just upgrade to the $7 monthly plan beforehand.
I also make an effort to use my auto-invest allowance first, so if I want to make a purchase of $2,000, I will simply create an auto-invest order for $2,000 for that particular stock and set it to start tomorrow.
The once the order has gone through, I simply cancel the auto-invest order so it doesn't repeat the following week.
With this approach, you can keep your brokerage fees capped at $15 per month, so long as you don't invest over $15,000.
Final Verdict On Sharesies
I think Sharesies has been a very welcome addition to the NZ sharebroking scene.
Even with their recent fee hike, which upset quite a lot of people, it still has the lowest brokerage fees on NZ and AU shares across the board.
When it comes to US shares, the only cheaper option would be Hatch, and that is only for orders above $600, and only if it's not part of your monthly plan allowance.
The Kids' Plan is a great initiative too and exclusive to Sharesies, and I would recommend everyone with kids to open an account and get their children's portfolios compounding as early as possible.
If you're new to shares, and especially if you don't want to take too big a step and want to start with just a few hundred dollars, not only is Sharesies the best option but it's frankly the only option.
Other brokers do not target small time investors and their minimum fees will be prohibitive for anyone not investing thousands of dollars at a time.
For people with portfolios under $10,000, Sharesies is the natural place to start.