I've been using Stake to invest in US stocks from Australia. I think it's one of the best share trading platforms and it's one of my most used apps. I've put together a Stake review for 2021 of what I like and what I don't.
What is Stake?
Stake is an Australian Share Trading platform. Currently you can trade US shares and ETFs (like Apple, Netflix, Amazon etc) but they will soon be adding ASX shares too.
Stake is a low cost investing platform that doesn't charge brokerage commissions. You can start investing with as little as $50. Thanks to platforms like Stake, you no longer need thousands of dollars to buy US shares from Australia.
The Top Stake Features You'll Love
These are the three features that make Stake stand out from the rest of the pack:
Commission Free Investing
Stake doesn't charge any commissions on trades. Platforms like Selfwealth will charge you $9+ every time you buy or sell some shares. You can buy and sell as much as you want without needing to pay any commissions.
You don't need to buy a full share on Stake. U.S exchanges support fractional investing and Stake supports this too. This means you can invest with as little as $10 at a time. This is great for dollar-cost-averaging and balancing portfolios!
You can deposit using POLi or a Bank Transfer. When you transfer Australian Dollars, it will get converted in U.S dollars. You can see the rate at which it will transfer and the FX (foreign exchange) fee you'll pay.
Why I use Stake to Invest
Here are some of the reasons why I like investing using Stake:
I can invest in Products I use and Love
Many of the products I use everyday like Apple, Youtube (alphabet), Netflix etc are based in the U.S. These are the companies that I believe in and want to invest in. I can do that through Stake.
Diversify Beyond Australia
Investing in Stake lets me invest in a new market and I can hedge and profit from a falling Australian dollar.
Access a Huge range of Assets
U.S markets are the most popular and diverse with a huge range and stocks and ETFs. For example the recent Bitcoin Futures ETF (BITO) is listed in the U.S. If you've ever wanted to invest in these assets you can do that through Stake.
A Well Designed App
Currently Stake is my top pick when it comes to investing app design. The app has been improved over the past couple of years and it's now very fast and reliable. Stake is a world away from traditional platforms like Commsec which are hard to use, ugly and clunky. While the colour scheme and design style might not be to everyone's taste, it is simple and straight forward. Even if you're new to investing, you won't be overwhelmed.
What You Need to Know about Stake
Here are some of the important details you need to know before signing up for Stake:
Stake Fees – Are the fees reasonable?
You're probably thinking that Stake is too good to be true! What's the catch? So even though Stake doesn't charge commissions on trades (Which is excellent), when you deposit money you will get charged an FX fee.
The good news is that the FX fee will be less than the commissions you pay on some other brokers. The even better news is that many of those brokers (like Commsec) charge both a brokerage and FX fee!
For me, Stake has ended up being way cheaper than using Commsec or Selfwealth.
Here's an example of how it breaks down when you deposit funds on Stake:
You can find out more about how the FX fee on Stake works here.
Stake Minimum Investment
The minimum deposit amount is $50 AUD. The minimum trade size is $10. So if you want to start investing through Stake you'll need at least $50, but you can spread this across multiple trades. Because Stake supports fractional investments, you don't need to buy a full share.
Is Stake Safe?
It's a fair question to ask whether Stake is legit and how safe it is investing through the app. Stake holds an Australian financial services license. Stake was launched in 2017 and since then they have maintained a good reputation and have over 360,000 customers.
Using Stake is no less safe than using other investing apps. When you deposit money on Stake is goes through an FX partner and then held in custody by Citibank. So you effectively have bank level security.
In the case of anything happening to Stake you are insured up to $500,000. If Stake was to go down, you would still have access to all your cash and securities.
So overall I believe that Stake is very safe to use.
How does Stake Make Money
Just because Stake doesn't charge commissions, doesn't mean they don't make any money. Stake makes money in a few ways:
- Stake charges an FX fee when you convert Australian dollars to U.S dollars. Commsec and Selfwealth charge a similar fee.
- Stake has a subscription product called Stake Black. This gives you advanced trading features (such as instant access to capital without needing to wait for settlement).
- Interest on Cash Deposits – Stake would earn interest on cash that has been deposited on the platform but not invested.
There has been a lot of talk about commission free brokers like Robinhood selling information about their order flow. Stake has stated in the past that they do not make money selling order flow.
Dividends on Stake
Even if you hold a fraction of a share, you will still earn dividends if they are paid out on that asset. The dividend will simply be proportional to your holding. Do note that US stocks usually withhold 30% of dividends for tax. If you submit a w-8 form, this is reduced to 15%. You can read more about claiming an offset on the ATO website.
Is Stake Black worth it?
I'm a subscriber to Stake black. Which is a Stake's subscription service for advanced trading features. I don't think Stake Black is worth it for most people. You do get some advanced financial details of stocks but you can get this info elsewhere. The main feature is access to funds without having to wait for settlement. When you sell stocks you usually have to wait 3 days for funds to become available with Stake black you can trade using these funds right away.
This is really only useful for trading and not long term investing. I do some day trading but this is definitely not something most people would need. Furthermore you'd need a balance of at least $25k for day trading due to U.S regulations on some exchanges. This is all for more advanced investors, for regular investors you won't need to subscribe to Stake Black.
How Stake Compares
Everyone is going to be investing slightly differently. So just because a platform suits me, doesn't mean it will suit you. I like to practice dollar-cost-averaging where I invest small amounts every week. Because there are no brokerage fees and I can invest in fractional shares, Stake is perfect for this. Where as if you're investing $20k at a time, it might be cheaper to use another platform that has a more competitive FX rate.
Stake vs Commsec
Commsec charges a brokerage fee of $19.95 on every US trade under $5000. It gets more expensive over $5k. This is charged when you buy and then when you sell. You are also charged an FX fee of 0.60% when you deposit AUD and it gets converted into USD.
Compared to Stake, Commsec is super expensive. Unless you're investing $100k at a time I would definitely not trade using Commsec. You'll lose a fortune in fees.
Stake vs Selfwealth
Selfwealth charges $9.95 per US stock trade. They also charge an FX fee of 60bps (basis points). Stake charges an FX fee of 70bps. So you'll get a slightly worse conversion rate on Stake. But you'll have to pay brokerage commissions on Selfwealth.
Selfwealth doesn't support fractional shares. This means if you wanted to invest in a company like Alphabet you would need over $1k just to buy 1 share!
I think the offering from Selfwealth for US shares is very weak. They charge brokerage commissions, an FX fee and don't support fractional investing. I can't see why you would use Selfwealth over Stake unless you were investing with very large amounts to offset the brokerage fees.
Get a Free Stock on Stake
If you sign up using a Stake referral code, you'll be eligible for a free Stock! You can find out more about how their stock promo works here. It's worth doing as the free stock could potentially be worth well over $100!
In Conclusion – My Review
If you want to invest in US shares etfs then I think Stake is one of best (if not the best) ways to do so. If you like to invest using dollar-cost-averaging than Stake is a perfect for this. You won't pay any brokerage commissions and you can invest small amounts with fractional investing. Brokerage commissions won't eat into your investments if you choose to invest as little as $10.