If you have been trading with US Stocks in New Zealand, Hatch is easiest and cheapest I found so far. Been trading with ANZ Securities (now Direct Broking) before, but I find Hatch better and cheaper for US Stock market. Direct Broking is reserved for New Zealand Stock market.
https://app.hatchinvest.nz/share/jchmgcxm
Key points for Hatch below.
- Fee per trade is US$3.
- Fractional investing is allowed.
- Bank transfer to fund your account.
- Clean and easy interface.
- No minimum investment amount.
- No holding fees.
- No joining fees.
- 0.5% To exchange your NZD to USD
- A one-off $1.50 USD fee and annual $0.50 USD fee pays for your W-8BEN tax form and yearly US tax filing.
Please read through the FAQ in the website for more details on the trading. Below are some of the screenshots.
Fractional Investing
The word itself means you can buy a fraction.
Example : You want to buy Apple (AAPL) at US$310.13 with a US$1,000 Capital.
Total Stocks Bought (TSB) = (Capital – Buy Fee) / Stock Price
TSB = (1000-3)/310.13 = 3.214780898332957 stocks
Market Buy Order Mobile Screenshot
Allows you to buy the lowest buy offer on the market or once it opens.
Limit Buy Order Mobile Screenshot
This allows you to set a value to purchase the stock. If not met, then the order will be cancelled. You can put another Limit Buy Order just in case.
Drawback of Fractional Shares
Since the US Markets opens at 1:30AM and closes at 8AM New Zealand time, there goes the tricky part of timezone difference. Stay awake during the US trading hours while majority is sleeping to trade fractional shares under the Market Sell order which will be instantaneous.
With the Limit Sell Order, set the price and go to sleep until the order fulfills or cancels depending on how the market performs. Fractional shares cannot be sold on this sell order type. You can only sell the whole number part of the stocks. With the example above, 3 stocks can be sold.
What Shares to Buy?
This is rather a complex question to answer. Make it a habit to be informed in Yahoo Finance, Bloomberg and other stock market websites. Study the graphs and the historical performance of the companies. Owning a stock is co-owning the company with limited voting rights for US stocks. Good to consider the Trillion dollar companies such as Apple and Microsoft. The FAANG (Facebook, Amazon, Apple, Netflix, Google). Biomedical companies dealing with Corona virus vaccines such as Gilead, Moderna, Pfizer and others.
Good Faith Violation
When buying and selling stocks, Good FaithViolation is important to consider. Hatch will bar you from trading for 12 months if you have the violation. How do you get a violation? From the example above, you can sell Apple stocks during the day you purchased it as the funds are available in your account when you bought it. The proceeds of the sale can be used to buy another stock, let’s say Facebook. If in case Facebook increased price at target sell price, then you cannot sell it. Hatch will prompt a Good Faith Violation. Rule of thumb: The sell proceeds will take 2 business days to clear.
What is the Target Profit?
It is important to set your target profit. Let’s say you target 5-10%. You can buy and sell as often as you can. Or set a higher price say 30% and wait until it reaches the target.
Pros and Cons of US Market Compared to NZ Market
Below are some of the reasons why investing in the US market versus NZ market.
Pros
- Higher market volatility
- Cheaper cost compared to approximately US$20 to buy and sell NZ shares.
Cons
- Trading time difference
If you want to dig digger into technical analysis, Fibonacci and other tools there are heaps of blogs and youtube channels you can learn from.
Cost Comparison Among Direct Broking, Sharesies, HelloStake and Hatch
Above table shows Hatch is still the best, cost-wise and volatility of US market. The only drawback is the trading hours in NZ (1:30AM to 8AM).
If you prefer NZ stocks, then Sharesies is good for investment under $5,000. If it goes above $5,000, then use Direct Broking. And hold this stocks for longer term but not multiple buy/sell within the year to save cost.
Graphical Comparison of Trading Cost with Investment Increase
Please perform due diligence before investing.
Disclaimer : All posts are reflection of the author’s ideas and do not represent anyone else. Author(s) are not financial adviser(s), simply a passive investor. Please consult a registered financial adviser for a personalised advice.