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Is Stake The Best Way For Australians To Buy US Stocks?

Investing in the US stock market is no longer a distant dream for non-US traders. Market players from around the globe are working to facilitate easy, convenient, cost-effective and profitable means of stock trading. 

 

Stake is one of the inventions that bring this dream to reality. It is an online shares platform that allows non-US investors to bet their chances in the US stock market. It’s user friendly, easy to access, and a definite way to make enormous fortunes from any part of the world. 

 

There are, however, numerous other bidding platforms out there, and it might be a little confusing for a trader that is new to the game. In such a case, guidance is necessary.

 

If you are just starting, your worries as a potential US stock investor are quelled with Stake. Stake is carefully crafted to provide a fair playing ground for all its users and with the most favourable terms possible, with the brokerage and transfer fees being straightforward.

 

Accessing the US stock market can be difficult, especially for non-US traders. You may end up spending a lot and doing a lot of paperwork, which makes investment challenging.

 

With the influx of online trading platforms, it can be tough to pick the right one to satisfy your trading needs. These apps impose different terms and conditions. For example, some don’t charge trading and brokerage fees, while others charge bank transfers and trading transactions.  

 

Fortunately, the emergence of applications such as Stake has made trading and selling in the US share market easier for non-Americans. 

 

Since its launch, the Stake app has gained a reputation for addressing significant problems that traders at the US stock market have been facing, especially those trading from outside the US. 

 

This guide sheds light on the Stake stock trading platform. We’ll take you through everything you need to know about the Stake app to help you determine whether it’s the best app for stock trading. 

Stake Overview

Stake is an Australian online trading platform that has opened its doors to non-US residents seeking to trade in the US stock market. It was founded in 2017 and has since grown to command online influence in Australia. Stakes quarters are in Sanlam Private Pty.

 

With its innovative technology, the Stake platform has significantly changed the landscape of the brokerage space. It has also expanded its services to the UK, New Zealand, and Brazil. 

Getting Started

The Stake app is a trading destination that offers Aussies (and other non-US traders) access to US stock markets without necessarily having a US trading account. 

 

With more than 3,500 stocks and Exchange Traded Funds (ETFs) on the Stake platform, users have everything they need to invest in the shares they choose. 

 

The Stake app users can choose from the membership tiers available—the free plan and premium tier known as Stake Black. Your choice of membership will often depend on your experience with the equity trading world. 

How Stake Works

Stake’s app operation is almost similar to most trading applications. However, it offers users more access to various stocks and shares, allowing them to invest in organisations of their choice. 

 

This app is user-friendly, and you’ll find it super-easy to use if you’re familiar with stock trading. Furthermore, Stake offers excellent support to newbies, ensuring that they safely start their trading journey. 

 

Traders can access Stake through smartphones or any other device that can access the internet connection. A user must be at least 18 years—according to its age limit requirements.

 

To trade using Stake, consider the steps below:

 

  1. Open an account. This step is easy and takes a few minutes to complete. You’ll also need an ID to prove that you’re over 18 years old. Ensure that the ID is at hand during your sign-up process. 
  2. Fund your account through the “Add Funds” feature via Online Banking POLi or Bank Transfer (direct Bank Transfer or BPay). 
  3. Pay for the stocks and ETFs that you wish to buy at Stake. The stock purchase process takes one to two days, so schedule it ahead of any stock purchases you’re planning to make. 

 

However, you can accelerate these processes at a fee. 

 

Users can decide to fund their accounts using the Express approach on Bank Transfers and PoLi to approve their funds on the next American trading day. This privilege will, however, cost you an additional 0.5% of your funding amount. 

 

As of now, Stake does not accept credit card payment methods. 

 

There’s zero FX fee on trades. The platform charges 70 bps of the transfer amount only when depositing into your account or withdrawing $2 and above. 

 

The Stake’s app user interface is super straightforward, especially for new traders. 

 

You can now start investing and trading in shares of your choice. 

Regulation

The Australian Securities and Investment Commission (ASIC) regulates all the trading platforms operating in Australia, including the Stake app. 

 

Its America brokerage partner (Drive Wealth) is controlled by Financial Industry Regulatory Authority (FINRA) and is a member of the Security Investor Protection Corporation (SIPC). 

 

In February 2020, Stake launched its operation in the UK to give access to the US stock market to UK residents as well. Even so, Stake is primarily designed for Aussies and regulated by the Australian trading laws and regulations.

 

While Stake offers you accessibility to various trading platforms, users can only acquire and trade US shares and ETFs. Therefore, anyone who wishes to use the Stake platform as a global stock tool will have to explore elsewhere. 

 

Luckily, the US stock markets currently dominate the stock landscape. NYSE and NASDAQ are ranked first and second in market capitalisation, respectively. 

 

Besides, Stake provides access to over 3,500 US stocks and exchange-traded funds (ETFs). The Stake app is ideal for anyone interested in the US stock market but unable to access it from another nation.

The Pricing 

The most significant benefit of the Stake app is that it allows you to trade in the American market commission-free. This platform, unlike most of its competitors, does not impose fees when trading on its apps. 

 

This state of things is excellent for short-term investors and anybody looking for fee-free stock access. Furthermore, Stake has no customary or account-keeping fees, although there is a $2 charge for every amount you withdraw from your Stake account onto your bank account. 

 

While the free-plan platform is free to use, the users can choose a $9 a month “Stake Black” scheme to get the premier tier advantage, including access to sales and stock analysis from experts. 

 

Also, if you pay for a year’s subscription, you will get a discount of about USD 90 ($7.50 a month).

 

However, since Stake operates using US dollars, you’ll need to convert US dollars into your Stake account or transfer Aussie dollars into US dollars. Currently, Stake charges 0.7% to transfer other currencies into USD, with the least transfer fee of $2. Stake’s rivals often charge higher than this scope for currency transfer services. 

Pros and Cons

Pros

  • It gives non-Americans access to the US stock market without necessarily having a US trading account
  • The user-friendly interface and chats are ideal for all traders at different trading levels
  • Stake platform does not have commission and customary fees, meaning you don’t have to worry about extra charges when trading at Stake
  • Stake complies with the US tax policies. Its sign-up process includes virtual submission of the US tax form needed to avoid paying a higher tax rate. You’ll be charged $5 for this service
  • Fractional shares are traded. You don’t have to own a whole stake in a high-priced company like Google or Amazon. You can purchase a portion of a share with Stake
  • Stake provides free shares to new members upon signing up. For example, upon signing up, you’ll get free Dropbox, Nike, or GoPro shares
  • Both a website and a mobile app are available, allowing you to trade on the go or from any other location.

Cons

  • You can only access the stock markets in the United States. Otherwise, you’ll need to seek somewhere else if you’re searching for a platform that gives you access to worldwide stocks, including Australian stocks
  • Fee for currency exchange. When converting AUD to USD for putting into your Stake trading account, you’ll be charged a 0.7% fee.
  • Funds are settled slowly. When you trade out of a position and don’t have the Stake Black account, you’ll have to be patient for roughly two days for your cash settlement. This predicament can be frustrating, especially If you need to trade swiftly
  • Data and simple charts are scarce. While the user interface is quite attractive, it lacks the functionality of competing platforms. Only three years of data are available.

  • Numerous small-cap stocks are not accessible for trading. On the NASDAQ or NYSE, many attractive, fast-growing small-cap stocks can not be bought or sold on Stake. You’ll need to ask for stocks to be added, and even then, you have no guarantee
  • There will be no margin lending. This quality especially concerns veteran traders
  • Customer support service is minimal. Poor customer service at Stake has been highlighted on Trustpilot and ProductReview.com.au

Alternatives to Stake

1. Raiz 

Raiz is ideal for investors who desire a more hands-off strategy for investing. This application automatically consolidates spare change and invests your funds in numerous shares, stocks, bonds and ETFs in the US stock market. 

 

However, unlike Stake, you cannot buy or sell specific shares.

 

Raiz is geared squarely at newbies and aspiring investors who don’t have a large sum of money to invest but are eager to venture into the stock market with their spare cash. 

 

It’s particularly famous among millennials and others who have never engaged substantially in the stock market before.

 

If you’ve ever used an app to sign up for a service, then configuring a Raiz account will seem very familiar.

 

Simply follow these processes:

 

  1. Download the Raiz app (accessible via Android and iOS)
  2. Create an account: All that is required at this point is your email address and a password
  3. Create a fundraising account. Through this bank account, you’ll deposit your money into and withdraw money from your Raiz account. The round-up amounts are determined using your card expenditure (step 4 below), but they are deducted from your bank account rather than your card account. (They use bank-level security and encryption, and no data is saved on your phone)
  4. Configure your expenditure sources for the round-up. This configuration might be a single credit card (including American Express cards) or a debit card, or as many as you want to connect
  5. Choose your investment strategy. Based on how much you want to stake, choose from one of seven investment portfolios. Conservative (lowest risk), Moderate, Moderately Aggressive, Aggressive (highest risk),  Moderately Conservative, Emerald (socially responsible), and Sapphire (highest risk) are the portfolios (5 per cent of funds invested in Bitcoin). You are not charged a fee if you alter your portfolio at any time.

 

The primary objective of Raiz is to automatically gather your extra cash as you spend using your credit card or debit card and invest it in a diverse portfolio of Exchange Traded Funds. 

 

An ETF is a financial product that blends shares or government bonds into a single financial outcome that may be purchased or traded in pieces on a stock exchange. 

 

Your fund will be combined with that of other Raiz investors to buy units in various ETFs, which Raiz will choose the ratio based on the risk profile of the investment portfolio you’ve chosen. 

 

Each investor owns a portion of the ETFs’ units, which might be larger or smaller based on their investment value

Pros and Cons

Pros

  • Stake’s UI/UX is user-friendly. Alerts aren’t intrusive and can be turned off. The desktop web app edition is also excellent.
  • It’s simple to get your cashback. There’s no need to fill out a tedious form. It’s incredibly beneficial for folks who would like to withdraw from the platform.
  • Excellent customer service. Every time you need to contact customer service, you’ll be promptly assisted
  • Round-ups is a fantastic feature. Connect it  with a credit card or a debit card, including American Express cards
  • Raiz Awards is an excellent plus function
  • It allows for investing in a bucket strategy, which  diversifies your risk

Cons

  • Low account balances attract high costs. If you only have a $250 credit, the $3.50 monthly fee will eat into your total. However, if you’re a Raiz customer with a $2,100 average investment, you’ll be fine
  • Anything can go wrong. Since  Raiz isn’t a savings or term deposit account, you could lose a hefty amount if the market falls. You’ll have to stay out of the market if you can’t stand losing your money.
  • Direct stock options are not available for purchase. 
  • There is little transparency into the firms in which your money is invested. It could be invested in companies that you dislike. To find out what’s inside each ETF, you’d have to do a quick Google search.
  • Only individual investors are eligible. Raiz is not yet available for commercial use.

2. Spaceship Voyager

Spaceship Voyager is a platform designed for beginners to start and develop an investment portfolio.

While most beginners find investment platforms complex and intimidating, this one is simple and user-friendly. Moreover, the Spaceship Voyager technology acts as the user’s financial mentor. 

 

Luckily, you don’t have to invest significant amounts to get started. A trader can deposit as little as $1 and select between three managed funds to trade in stock in Australia and globally. 

 

With Spaceship Voyager, all the aspects of setting up an investment fund are simplified.

 

  1. Download and install the app (free). Or simply set up an account online
  2. Sign up-This phase is easy breezy; all you have to do is enter your information into the form, and you’re done
  3. Select a portfolio. Based on how much you want to risk and how much money you would like to gain from your investments, you can pick from three different portfolios
  4. Link your bank or savings account with  the app to make quick cash transfers

To create your Spaceship Voyager portfolio, you can deposit as little as USD1 and top up whenever you wish. 

 

Additionally, this platform offers a ‘set and forget’ investment function that allows you to set up structured weekly, fortnightly, and monthly funds top-ups to your investment. 

 

To track how your investment is performing, you can confirm your portfolio and the profiles provided by the company by confirming from the app. 

 

There’s also no fee payable for accounts with a balance below $100—no payments for depositing cash, withdrawing cash, brokerage or exit fees.

 

In most cases, however, your portfolio balance will be over $100. 

 

When your portfolio balance hits this limit, you’ll be charged a monthly fee of $2.50 per account. This reality implies that if you’re trading in more than one of the three accessible portfolios—Original, Universal, and Earth—you’ll pay only one monthly charge. 

 

The flat rates replaced the Spaceship Voyager’s initial fees structure which charged a portion of your portfolio balances. And though this new fee plan is not ideal for investors with a low balance, it’s a great deal to investors with healthy portfolios. 

 

For instance, if you invest $5,000, a fee of $2.50 a month or $30 a year is only 0.6% of your balance. 

Pros and Cons

Pros

  • You can choose from a variety of portfolios based on risk, performance trend, and the kind of firm you want to invest in
  • The fee plan is affordable and straightforward. For balances under $100, there is no fee, and for accounts with a total value exceeding, there’s a monthly fee of $2.50 ($30 per year)
  • You don’t need any personal experience since specialists pick the organisations you invest in for each portfolio type
  • Spaceship Voyager’s mobile app makes it accessible from anywhere
  •  It has an auto-top-up feature, allowing you to invest small amounts a regular intervals
  • The investing team refreshes the content regularly
  • There are no costs for entry/exit, and you can start with just $1

Cons

  • Individual companies are not available for investment
  • There’s no assurance that lucrative returns will continue, so previous success isn’t always indicative of future development
  • Currency fluctuation: Portfolios may include investments in foreign stocks, and though Spaceship hedges against currency risk—one of the reasons for its cheap costs—currency swings may affect the value of your portfolio (both negatively and positively)
  • Exposure to foreign risks because your portfolio contains investments in foreign nations that may become financially or politically unstable

3. CommSec Pocket

CommSec Pocket is a micro-trading phone application by the CBA ( Commonwealth Bank of Australia). It’s reputed to assist investors to convert their savings, as little as $50, into investments in chosen EFTs. It’s promoted as an easy-to-use investment adventure. 

 

The EFTs equivalent of corporation shares is units. Each unit you buy represents a percentage of the investments owned by the respective ETF.

 

CommSec Pocket provides two methods to invest:

 

  • One-off investment: is one that is not made regularly
  • Regular mode (default). Make a consistent, ongoing investment so that you can gradually build up your investment portfolio. You can choose a frequency that corresponds to your pay or other income patterns, such as fortnightly or monthly

 

If you’re interested in CommSec Pocket, register as follows:

 

  1. Download the CommSec from Google Play Store or iOS  App Store. or just sign up online via a web browser.
  2. Acquire a CommBank transaction account and a CommSec ID or a NetBank ID to allow you to use CommSec Pocket. In five minutes, you’ll be done creating an ID and account online. Then, using your CommSec ID or NetBank ID, login and check your account information
  3. You can begin investing after depositing funds into CommSec Pocket from your transaction account
  4. Determine if you prefer to invest one-time or regularly

Pros and Cons

Pros

  • CommSec Pocket makes trading in the stock market simple
  • With the Regular option, you can invest on autopilot and benefit from dollar-cost averaging throughout time
  • Low risk involved 
  • Start with just $50 and work your way up. Buying shares directly from a broker, on the other hand, often requires a $500 minimum commitment.
  • Low fixed transactions fees, $0.20 per $1,000 in trade value, with a cost of 0.20 per cent for trades exceeding $1,000
  • There are no account maintenance costs or ongoing charges
  • It comes with a mobile app, which allows you to invest and track your investments from anywhere with the app
  • They offer top-notch articles and advice for individuals interested in learning more about trading and ETFs

Cons

  • You can only invest in ETFs. You can’t invest directly in shares with CommSec Pocket, such as an initial public offering (IPO)
  • Market risk leaves a possibility that the value of your investments will fluctuate with the stock market. Fluctuations in exchange rates may also influence your investments.
  • There is a lack of adaptability. There are just seven themed ETFs to choose from
  • Withdrawing cash can take a day or more.
  • In comparison to other micro-investing applications accessible in Australia, such as Spaceship and Raiz, the CommSec Pocket demands a higher minimum investment 

 

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