Comparing investment platforms: Sharesies vs ASB Securities
Updated: 30 August 2020 (original article written on 19 April 2020)
Kiwi investors or investors-to-be have never had more choice when it comes to investment platforms. We look at two well known platforms that you can use to invest. On one hand, the well established ASB Securities platform. On the other, a relatively recent name that has become popular in the last couple of years, especially for millennials entering the stock market.
We compare four key aspects of each platform:
Opening an account
Putting money into the account
What investments can be purchased and sold
How much it cost to trade
At the end, we leave you with our parting thoughts on both platforms. Hopefully this will help you consider if one of this is right for you.
Opening an account
Sharesies - The account opening experience was very quick. Everything was done online and it felt like the whole process took only five minutes. The information required was straightforward and easily accessible - name, email, address, phone number and IRD number. The online address verification did not work in our experience perhaps due to having moved addresses in the last two years. However, taking a picture and uploading a statement with the current address was easy enough.
Updated (30 August 2020): if you are looking to trade US shares, you will need to submit a W-8BEN or W-9 tax form for the Internal Revenue Service (IRS) and this is easily done when you select to "Invest in US shares" on the platform. Easy!
ASB Securities - This process is not currently available online for non-ASB customers. In order to get an account setup, it requires an in person visit to an ASB branch. However, this is currently not available given the Lockdown. For existing ASB customers with their online banking setup, this process can be done online. Log in to your ASB FastNet account and you can apply for access from within your account.
Putting money into the account
Now that you are setup with an account, the next thing to do will be to put money into the account so when the time is right, you can own a little of the company you want to invest in.
Sharesies - There are two ways you can put money into your account (i.e. Wallet). (1) Transfer from your bank account. This is straightforward. You get Sharesies account number and a unique reference and you use that when you make the transfer. Given our great banking system, the money enters the account within hours of the same day. (2) Alternatively, you can load up your Wallet using an accepted bank card e.g. Visa, MasterCard, American Express, etc. We used a credit card. However, be aware that there is a fee for this option and it is not cheap. It costs 2.65% + $0.18. This means that if you can putting $1000 into your account, the fees will cost you $26.68. Sharesies makes this clear in the checkout process so it is not hidden from you.
Updated (30 August 2020): You can now trade US shares but in order to do so you'll need USD. There is a 0.4% exchange fee applied. Simply you will have to exchange your NZD to USD and use the USD in your account to purchase US shares. The Sharesies FAQ page suggest that the rates used are live and can be viewed on XE which gives us reason to be happy. Most banks will charge a hefty markup on the exchange rate which is a double whammy i.e. fee on exchange amount and margin on the exchange rate.
ASB Securities - Assuming you are an ASB customer, this process is simple. Open up your app or internet banking account and make the transfer as you would normally into another of your own ASB account. The account is called a Cash Management Account. It takes seconds and no fees are attached. There is no option to use a card to fund your account.
What investments can be bought and sold
Sharesies - Simply, you can invest in NZX-listed companies, NZX exchange-traded funds, or managed funds, and now US shares. There are a total of 165 companies and funds in NZ that is available to purchase and sell through the platform.
Updated (30 August 2020): Hooray you can now trade US shares! Supposedly more than 2500+ companies listed on US stock exchanges.
ASB Securities - Generally, you can invest in companies that are listed on the stock exchange in New Zealand and Australia online. Some of the familiar names in the local and Australian markets are ANZ bank, Warehouse Group, Meridian Energy, Air New Zealand, etc. Local and Australian ETFs and managed funds are also available to trade online. For overseas stocks such as in companies such as Amazon or Nike etc, these can be bought but not through the online platform. You will need to call in to ASB Securities to make these trades.
How much does it cost to trade
Sharesies - There are two fees. The first is a fee for using the platform (i.e. subscription fee). You can either choose to pay annually (i.e. $30 annually) or pay monthly (i.e. Free for portfolios with less than $50, $1.50 for a portfolio between $50-$3,000 and $3.00 for anything above). The second fee comes into play when you make a transaction i.e. buy or sell. For transactions worth <$3,000 the fee is 0.5%. For example, if you bought $1,000 of Air New Zealand shares the transaction fee will be $5.00. Transactions above $3,000 will cost 0.1% for the the portion over $3,000. For example, if you bought $4,000 worth of Air New Zealand shares, you will pay $15.00 in transaction fee for the first $3,000 of shares and another $1.00 for the additional $1,000 of shares. The total transaction cost for a $4,000 trade will cost you $16.00.
Updated (30 August 2020): This does not seem to be widely advertised but there are no transaction fees charged on NZX listed ETFs. For example, when investing into Smartshares NZ Top 50 Fund, there is no transaction fee! Makes regular small investments (read up on dollar-cost-averaging) more affordable.
ASB Securities - There is only one fee here which is the transaction fee. Simply, if the trade is less than $1,000 the cost is $15.00. If the trade is more than $1,000 the fee is $30.00. No subscription fee.
Here's an example of what it will cost you if you were to invest $500 a month over a one year period. At the end of the year, you will have invested $6,000. Here's a breakdown of the cost of each platform.
Sharesies - 1. Subscription fees = $27 (i.e. first six months cost is $9 then for next 6 months cost is $18). 2. Transaction fees = $30 (i.e. 0.5% x $500 x 12 trades in a year). Total fees = $57.
ASB Securities - No subscription fee. Transaction fee (i.e. $15 x 12 trades in a year) = $180. Total for this is $180.
This comparison shows Sharesies to be considerably cheaper. However, ASB securities does not have ongoing cost (i.e. subscription fee) whereas Sharesies will continue to cost you $30 a year in the years after to hold the shares.
Feature to note - Market Depth
Sharesies - Market depth is an additional pay-to-use feature. It costs $10 per month with the first month currently free. This feature helps you "see if there are shares available at the price you want to buy at, or if there are buyers waiting at the price you want to sell at."
ASB Securities - Market depth is available at no additional charge and can be viewed by clicking on Depth on the dashboard.
If we included the cost of this feature into the example above, it will add another $110 to Sharesies cost for the year. This brings the total to $167 against ASB securities $180.
Our parting thoughts
Sharesies - Sharesies is a game changer. It has brought colour (literally) and an amazing easy-to-use experience. With the recently added (August 2020) ability to trade US shares, this platform offers a lot to Kiwis trying to diversify their investment. Lots of effort has gone into making investing easy especially for Kiwis brand new to this. The dashboard will ideally be upgraded to make it easier to track investments or target investments. While not available in app form, it is optimised for a mobile user experience. The fees are certainly more affordable but it can easily start to add up for users especially if the Market Depth add-on is selected. Also, if the account is not actively trading, the subscription fees will still continue and add up over time.
ASB Securities - As the more established platforms, it provides access to a wider range of investment options. However, getting setup and ready to invest takes more effort than what new users are used to today. The platform is not built for a mobile experience which limits the usability. The one-fee structure is simple it is comparatively more expensive. On the plus, it does not have a subscription fee nor will users have to pay for Market Depth insights.
Originally posted on 19 April 2020, this post was updated on 30 August 2020 to mainly capture Sharesies ability to purchase US shares.