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The quarantine monotony during coronavirus lockdown, along with ‘buy-the-dip’ opportunities offered by equity market trends has prompted the entry of several new investors in New Zealand capital market this year, creating lucrative business prospects for online brokerage firms.
What’s important here is adopting the right set of strategies while comparing online brokerage firms present in the market and avoiding some inherent risks associated with online trading.
In this article, we will provide a general overview of the key players available in the NZ online brokerage market.
While the advancement in affordable high-speed internet connections and computers has been facilitating the growth of online trading since 1990s, the implementation of lockdown restrictions across the world amid COVID-19 pandemic has further stimulated a rise in trading via web-based trading platforms during 2020.
The increase in the popularity of online investing seems to be no surprise, given an uptick in NZX trading activity over the past few months. An uptick in market activity resulted in the daily number of trades averaging about 48k on NZX across the initial six months of 2020, with a total number of trades surpassing the full-year level of 2019 by early June 2020.
With several NZX-listed companies still trading at undervalued prices, the equity market is offering a plethora of opportunities for both novices and professionals to make attractive profits over the long run.
In order to harness the benefits of capital market opportunities, choosing the right brokerage service aligning with investment goals can make the difference between an exhilarating new income stream and exasperating disappointment.
With that said, take a look at some prominent online brokerage providers in Kiwi Land, along with their key features and pricing:
Quick Guide to Choose Your Brokerage Provider
With numerous options to choose from, market players should consider various factors while picking on the best brokerage provider suiting their needs and risk profile. Below are some of the factors that need special attention in this regard:
- To evaluate brokerage providers, the first and foremost thing one can access is investments offered by the broker. Different trading platforms offer a different set of investment options, ranging from NZ and international shares to commodities and bullions. One can shortlist a broker offering a menu of investment options matching one’s requirements.
- Besides, careful attention is needed on commissions or fees charged by brokers for your preferred investments. One needs to be wary of the brokerage fees to be paid to the broker to avoid losing a large chunk of profits.
- Additionally, brokerage service providers offering real-time and dynamic market updates can be given preference over those providing delayed news. Besides, careful consideration on ease of using online trading platforms can help traders make fast and precise trades in response to market changes.
- One can give a thought over the expected frequency of trade over a trading platform. This may help a trader to make a choice between a trading platform offering a range of features and one with limited features. It is also worth noting that some platforms charge higher broker fees or inactivity fees if one does not undertake a minimum number of trades per quarter, month or year.
- You should also talk to the broker after shortlisting a few or more, and know about the procedure, formalities, integrated account services, charges, fees, settlement charges, custody fees, privacy assessment, additional service on demand etc.
While online brokerage services provide traders/investors with the ability to take charge of their finances and invest in a range of financial instruments in an affordable and convenient way, the severity of financial decisions should not be neglected, and investors should thereby act in accordance with their risk appetite.
Remember, a blind click without understanding can cost you a bunch of cash!
