STAKE: INVEST IN US COMPANIES
What is it?
Stake is essentially an online shopping site for investors who want to invest in the US, giving Aussies access to more than 3000 US stocks and exchange traded funds (ETFs) including well-known brands such as Apple, Amazon, Netflix and Tesla.
How does it work?
The site aims to give an online shopping-like experience and you can search out investments in your areas of interest. For example “shoes” would bring up companies like Nike. There’s also a filtering option that lets you narrow down your search based on a range of factors including lifestyle, region, industry and values.
The drop down “discovery bar” lets you search for shares based on what’s trending. Some of the current options include “bet against Trump”, “invest in female leaders” and “see what Buffett owns”.
Stake takes a “dollar-based investing” approach, which basically means you can buy an exact dollar amount of a security and don’t have to invest in a multiple of a share price.
For example, Apple’s share price at the time of writing was $US155.90 (about $A200). If you invest $US100 you’ll get about 0.6414 Apple shares, or invest $US500 and you’ll get 3.2072 shares.
The minimum investment amount is currently $US50 but you have to transfer a minimum of $A500 into US dollars to start trading.
At the moment Stake is only available to individual investors over the age of 18 but there are plans to make it available to self-managed super funds, trust and company accounts and minors.
A unique feature is the gift card concept, allowing you to purchase US shares as a gift for someone else. You can buy a gift worth between $US10 and $US500 in any company you like and have it sent to whoever you like. They will need to “redeem” their gift within one year to register the shares in their name. You can even buy a gift for yourself.
What are the pros?
It is a fairly low-cost way to invest in the US market and the site is very easy to use, so buying the shares is a breeze.
What are the cons?
The smaller the amounts you transfer the more expensive it is as you’ll pay $A5 if you transfer less than $A2500 into US dollars and don’t use POLi.
Stake doesn’t give investing advice so you’re really on your own. You need to do your own research into the shares and be confident in your own decisions.
What are the fees involved?
Although there is no brokerage fee to buy shares you will have to pay 0.7% on the spot FX rate when you transfer funds between Australian dollars and US dollars. On a $A500 transfer the fee would amount to $A3.50. This is only charged when you transfer money and not on every trade.
If you transfer less than $A2500 into your account you will also pay $A5 unless you use POLi.
Some regulatory fees will apply when you’re selling shares.
Gift cards come with a different set of fees. You’ll pay $US5.99 per share and a 2% fee, which makes buying a gift pricey. The recipient doesn’t have to pay anything to redeem their shares though.
How has it performed?
It really depends on the individual shares that you buy as Stake is just the trading platform.
How safe is it?
Stake never touches your money, says the website. Funds held in Australia (through Macquarie bank) are covered by the government’s $250,000 deposit guarantee. Your US cash and securities are held at a custodian bank (ICBC USA) and managed by DriveWealth. Customers are insured for up to $US500,000 under the US SIPC scheme.
How do I get started?
You’ll need to open an account (unless you’re just buying shares as a gift), which costs nothing and can be done online. You’ll need to provide proof of identity and a document showing your current residential address. It will take two or three days for all your details to be verified.
You’ll be set up with a US brokerage account (powered by DriveWealth) so you can buy and sell shares and an Australian dollar wallet (powered by Macquarie Bank), which you have to use to transfer funds to US dollars. You’ll also need to fund your account to trade.
You can then go shopping for shares. If you’re buying a gift, though, you don’t need to open an account. You can simply add the shares to the “gift cart” and a code will be sent to the recipient.