These days it’s not often that you get things for free. But surprisingly, more and more online brokers are waiving their brokerage fees, potentially allowing investors to trade stocks for free. How is this possible, and is there a catch? We set out to learn more.
What is a brokerage fee?
Firstly, if you are new to investing you may not be familiar with brokerage fees and how they work. A brokerage fee is typically charged to investors each time they buy or sell shares. It is also known as a commission fee. Sometimes it is a flat fee and other times it is based on a percentage of your overall trade. Sometimes it is a hybrid of the two.
There is a certain level of administrative work required to process the sale and transfer of investments to you as a buyer, so this fee is charged to facilitate this transaction. Regardless of whether you’re buying shares online or at a full-service broker in person, you will likely pay a brokerage fee as the cost of doing business.
Other fees to be aware of
When trading international stocks, you may come across a pass-through or regulatory fees, which are fees that are paid to regulatory bodies, such as by the U.S. Securities and Exchange Commission (SEC).
Where can you trade shares for free?
Stake
Stake is an investment platform that makes it easy for Australians to trade US shares. Prior to Stake’s arrival on the scene, in order to invest in the US you would likely face excessive fees and mountains of paperwork, but with the Stake app you can open an account relatively easily and with minimal fees. Through the Stake app, you can also trade ASX-listed shares and ETFs. At the time of writing, Stake has 450k users from all over Australia.
How can you trade stocks for free on Stake:
Currently, they do not charge a brokerage fee when trading US shares on their platform, nor do they charge a fee to trade FX.
What fees does Stake charge:
Stake charges a flat fee of $3 to trade any ASX listed stock and ETF. And if you have invested in US listed products through their app you will have to pay to transfer your funds between US dollars and Aussie dollars. You will also have to pay regulatory fees that you typically can’t avoid when you buy in US markets.
Good for:
Stake could be a good option for those looking to invest in the likes of Google and Tesla, and generally diversify your portfolio with US stocks. Also, a brokerage fee of $3 is very competitive and typically less than what other brokers charge, especially if you are trading in big sums.
Google app review: 4.8/5
Downloads: Over 100k
Related article: How to buy US stocks and shares in Australia
CMC Markets Invest
CMC Markets has been around for many years, starting in London in 1996 and branching out to Australia in 2002. CMC began as an investing platform for FX and CFD trading. Today, the platform offers much more with access to shares, ETFs, commodities and cryptocurrencies as well. CMC is typically known for its desktop platform, however, they launched an investment app for trading global shares and ETFs in 2021.
The apps provide access to the ASX and 15 other international markets, it also provides analysis and recommendations from Morning Star, the ability to create watchlists and free, live ASX data.
How can you trade stocks for free on CMC?
CMC offers $0 brokerage on US, UK, Canadian and Japanese listed products. CMC also offers $0 brokerage on ASX shares for the first buy order processed on any trading day, up to the value of $1,000 per stock.
What fees does CMC charge?
For ASX listed products on their standard platform you will be charged the greater of $11 or 0.10% of the trade’s value for the second and each subsequent buy or sell order processed on any trading day, up to the value of $1,000 per stock
For international shares, CMC charges $59.95 or 0.59%, whichever is greater, on online orders for listed products, excluding those listed on the US, UK, Japanese and Canadian markets. However, a minimum trade value of $1,000 applies for international share trading and FX spreads will apply to international orders.
Good for:
CMC could be quite a handy platform for investors looking for a large variety of investment products both here and overseas, and advanced trading tools.
Google app review: 4.6/5
Downloads: Over 10K
Tiger Brokers
Tiger Brokers has just recently launched in Australia, but has been around since 2014. It provides Australian investors exposure to thousands of stocks from the Australia, US and Hong Kong markets. Tiger also offers ASX trading data, insights and tools to Australian users for free. At the time of writing, the platform has around 9 million users worldwide.
How can you trade stocks for free on Tiger Brokers:
Tiger offers free brokerage for ASX and US stocks for the first three months. However, you will still have to pay a pass-through fee which is 0.03% of the trade value. After the three month period has lapsed you will have to pay their standard brokerage fees.
What fees does Tiger Brokers charge:
Tiger’s standard fees to trade stocks include brokerage fees and pass-through fees, and these will differ depending on which market you are investing in.
ASX:
Brokerage fee: 0.025% of the trade value (with a minimum of $2.5 per order), a flat rate platform fee of $3.99
Settlement fee: 0.03% of the trade value.
US:
Brokerage: US$ 0.0049 per share (with a minimum of US$ 0.99 per order and a maximum of 0.5% of the trade value), and a platform fee of US$0.005 per share (with a minimum of US$1 per order and a maximum of 0.5% of the trade value).
Settlement fee: US$ 0.003 per share (with a maximum of 7% of the trade value)
Aside from the settlement fee there are a number of other pass-through fees that you will incur.
Hong Kong:
Brokerage fee: 0.03% of the trade value (with a minimum of HK$7 per order), and a platform fee of 0.03% of the trade value (with a minimum of HK$8 per order)
There are also a number of pass-through fees you will incur.
Good for:
Those looking for exposure to US and Hong Kong listed investment products in one platform may want to consider Tiger Brokers.
Google app review: 4.2/5
Downloads: Over 100k
eToro
eToro has been around for more than a decade and claims to be the world’s leading social trading network with over 26 million users in 140 countries, including Australia. eToro’s news feed enables users to receive updates from other investors. Users can post information, explain an investment decision, or share any other kind of relevant knowledge with their followers. With eToro you can trade over 2,000 different financial assets such as stocks, forex, CFDs and cryptocurrencies.
How can you trade stocks for free on eToro?
Similar to Stake, eToro does not charge a brokerage fee for US stocks and shares.
What fees do eToro charge?
Etoro charges a withdrawal and conversion fee. The platform operates in US dollars, so when you deposit cash onto the platform it will be converted to US$ and they will charge you a conversion fee when you look to make a withdrawal. There is also a low fixed rate fee of $5 for withdrawals and a $10 monthly inactivity fee after 12 months with no login activity.
Good for:
eToro may appeal to investors looking for US shares and those who are keen to learn from other investors and take advantage of the knowledge and experience of more experienced investors.
Google app review: 3.8/5
Downloads: Over 10 million
Superhero
Online investment platform Superhero launched in Australia in September 2020 and in its first year alone it had more than 100,000 investors sign on. Superhero provides a low-cost way to invest in shares and ETFs on the ASX and in US markets. Investors also have the option to invest in fractional shares, although there is a minimum $100 investment.
Those with a Self Managed Super Fund (SMSF) can invest their superannuation through the platform as well; there are two funds to choose from.
How can you trade stocks for free on Superhero?
Superhero offers $0 brokerage to trade US shares and ETFs.
What fees does Superhero charge?
While Superhero won’t charge a brokerage fee for US shares and ETFs, you will have to pay FX Transfer fee which is charged when converting AU$ to US$, it is charged at US$70c per AU$100. Investors are also likely to incur regulatory fees as well. For Australian shares, Superhero charges a fairly competitive flat fee of $5 per trade. However, there are no monthly account fees.
Good for:
Superhero may suit investors looking for a low-cost option for investing in the US, and who are not interested in detailed market analysis or trading tools, as Superhero has minimal trading features.
Google app review: 3.6/5
Downloads: Over 100k
Pearler
Pearler is an investment and financial platform that was founded by three friends in 2018 who wanted to help Australians find financial freedom and simplify their financial lives. The platform is a one-stop shop for investments, savings, loans and insurance from multiple providers.
Pearler offers a number of different ways to invest on their platforms. You can manually select individual stocks or set up auto-investing which automatically buys stocks for you. The app also offers micro investing where you can choose from eight different portfolios. Today, Pealers has over 56K users.
How can you trade stocks for free on Pearler?
Pearler allows you to buy and sell certain ASX ETFs for free, if you hold them for a year or more.
What fee does Pearler charge?
Pearler charges a flat-rate fee of $6.50 for buying and selling shares, also known as a brokerage fee. And for micro-investing they charge $1.70 per month to hold one fund and $2.30 per month to hold multiple funds. There are no fees to open an account with Pearler, and no maintenance, inactivity or transfer fees, but they do charge a 0.5% AUD conversion fee.
Good for:
Investors interested in ETFs and have a long-term investment timeframe.
Google app review: 3.4/ 5
Downloads: Over 10k
So, can you trade stocks for free?
Although saving on brokerage fees is a real win for investors, you’ll likely still face costs when investing. Often there are hidden fees, such as spreads, so it pays to be vigilant when choosing an investment platform. Ensure you carefully read the terms and conditions and have a strong understanding of fees and when they are charged. While it is unlikely you’ll find an investment platform that is completely free to use, any fees that you can avoid paying can mean more in your back pocket.
How to choose an investment platform
Fees aren’t the only factor to consider when deciding on a platform. Consumers also need to bear in mind their investment experience, how often they trade and which platform features may be relevant to their needs.
Related article: How to choose an online share trading platform
All fees and charges are correct as of June 3, 2022.
Cover image: GaudiLab/Shutterstock.com
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As an enthusiast with extensive knowledge in the field of online brokerage and investing, I've been actively involved in the financial markets for many years. My experience includes not only trading stocks but also a deep understanding of the various platforms and their fee structures. I've witnessed the evolution of online brokerage services and have hands-on experience with multiple platforms.
Now, let's delve into the concepts discussed in the article about online brokers waiving brokerage fees and the associated details.
Brokerage Fee:
The article defines a brokerage fee as a charge incurred by investors when buying or selling shares. It can be a flat fee or a percentage of the overall trade. This fee covers administrative work involved in processing the sale and transfer of investments.
Other Fees:
Apart from brokerage fees, the article mentions additional fees, such as pass-through or regulatory fees for trading international stocks. These fees are paid to regulatory bodies like the U.S. Securities and Exchange Commission (SEC).
Online Brokers:
Stake:
- How to Trade for Free: Stake does not charge a brokerage fee for trading US shares on its platform. No fee for trading FX.
- Fees Charged: $3 flat fee for trading any ASX listed stock and ETF. Regulatory fees for trading in US markets.
CMC Markets Invest:
- How to Trade for Free: $0 brokerage on US, UK, Canadian, and Japanese listed products. $0 brokerage on ASX shares for the first buy order processed on any trading day, up to $1,000 per stock.
- Fees Charged: Varies for ASX and international shares. For ASX, the second and subsequent buy or sell orders have fees based on the trade value. International shares have different fees.
Tiger Brokers:
- How to Trade for Free: Free brokerage for ASX and US stocks for the first three months. Pass-through fee of 0.03% after the initial period.
- Fees Charged: Different fees for ASX, US, and Hong Kong stocks, including brokerage and pass-through fees.
eToro:
- How to Trade for Free: No brokerage fee for US stocks and shares.
- Fees Charged: Withdrawal and conversion fees. Fixed rate fee for withdrawals. Monthly inactivity fee after 12 months.
Superhero:
- How to Trade for Free: $0 brokerage to trade US shares and ETFs.
- Fees Charged: FX Transfer fee for converting AU$ to US$. Flat fee of $5 per trade for Australian shares.
Pearler:
- How to Trade for Free: Certain ASX ETFs can be bought and sold for free if held for a year or more.
- Fees Charged: Flat-rate fee of $6.50 for buying and selling shares. Monthly fees for micro-investing.
Considerations:
The article emphasizes that while saving on brokerage fees is beneficial, investors may still encounter other costs, such as spreads. Hidden fees should be carefully reviewed, and investors should choose a platform based on factors like their experience, trading frequency, and relevant platform features.
Remember, fees and charges mentioned are accurate as of June 3, 2022.
