Step-by-Step Guide to Opening an Online Brokerage Account
Investing in shares has become increasingly accessible, thanks to the rise of online brokerage platforms. Whether you’re a seasoned investor or a beginner, opening an online brokerage account can be a straightforward process if you follow the right steps. This guide will walk you through the process, tailored for the local market.
Step 1: Choose the Right Brokerage Platform
The first step is to select a brokerage platform that suits your needs. Here are some popular options:
- Sharesies: Ideal for beginners, Sharesies allows you to start investing with as little as 1 cent. It offers access to shares, ETFs, and managed funds across local, Australian, and US markets.
- ASB Securities: Known for its reliability and customer satisfaction, ASB Securities offers direct trading in local and Australian markets with the option to trade in other international markets via phone.
- Tiger Brokers: Best for low-cost trading, Tiger Brokers provides access to shares and ETFs in the US, Australia, and Asian markets.
Step 2: Gather Required Documents
To comply with the Anti-Money Laundering Act, you’ll need to provide specific documents:
- Identification: A valid local driver’s licence or passport. If you don’t have a local ID, you can use a certified overseas passport.
- Proof of Residential Address: This can be a bank statement, utility bill, or a government document dated within the last 12 months.
Step 3: Sign Up Online
Most platforms allow you to sign up using either their website or mobile app. Here’s a general process:
- Register: Sign up using your mobile number or email address.
- Enter Personal Details: Provide your name, date of birth, nationality, and ID details.
- Provide Address Details: Enter your residential address for verification.
- Employment and Income Details: Fill in your employment status and income information.
- Choose Account Type: Decide whether you want a margin account or a cash account.
- Investment Information: Provide details about your investment experience and the nature and purpose of your investments.
- Agree to Terms: Read and agree to the platform’s terms and conditions.
Step 4: Verification and Approval
Once you’ve completed the application, the platform will verify your information. This process may include electronic verification of your ID and address. If electronic verification fails, you might need to upload or mail additional documents.
Step 5: Fund Your Account
After your account is approved, the next step is to fund it. Most platforms offer multiple ways to deposit money, including bank transfers and credit card payments. Ensure you have sufficient funds to cover any initial purchase costs, including brokerage fees.
Step 6: Start Investing
With your account funded, you can start trading. Here’s how:
- Research Investments: Use the platform’s tools to research shares, ETFs, and other investment options. Platforms like Sharesies and ASB Securities provide market data and analysis to help you make informed decisions.
- Place Orders: Decide whether to buy at market value or set a limit order at a specific price. Ensure you have enough funds in your account to cover the purchase and any associated fees.
- Monitor Investments: Track the performance of your investments through your online account. Most platforms offer tools to help you monitor price changes and manage your portfolio.
Step 7: Understand Fees and Charges
Different platforms have varying fee structures, so it’s essential to understand these before you start trading:
- Transaction/Brokerage Fees: Fees for buying shares can vary. For example, ASB Securities charges NZ$15 for trades up to $1,000 and 0.3% for trades over $10,000.
- Currency Conversion Fees: If you’re trading in international markets, be aware of currency conversion fees. ASB Securities, for instance, has a less favourable exchange rate, effectively adding a 2% fee.
- Other Charges: Some platforms may have additional fees for services like phone trading or accessing premium features.
Opening an online brokerage account is a significant step towards achieving your investment goals. By choosing the right platform, gathering the necessary documents, and following the registration process, you can start trading shares with confidence. Remember to stay informed about fees and continually monitor your investments to make the most of your trading experience. Happy investing!