Giving you all the latest in Stock Market Information as it happens
 

Month: July 2010

Find a CFD Broker

When looking for a CFD broker and platform, there are a number of things that need to be considered.
 
1. The reputation of the broker in terms of how long they have been operating for, who they are backed by, and their standing in the sector. Unfortunately there are always going to be suspect operators that crop up, so it is important that you do some research and go with a trusted name.

2. Ensure that the client funds are kept in separate trust accounts. This is an important safeguard to ensure the funds are available if you want to withdraw money from your account.

3. Ensure that the instruments that you are interested in trading are in fact available on the trading platform you choose. Aside from shares, many investors and traders are looking to gain access to more exotic markets, such as currency and commodity markets. Those looking to gain exposure to gold or oil, for example, will need to ensure that the CFD broker they choose offers these instruments.

4. Fees and commissions. There are a number of ‘costs’ involved in CFD trading which traders and investors need to be aware of.

Commissions, just like those paid to a share broker, are the costs incurred when a transaction, such as a purchase or sale, is made. Much like share brokers, there is a vast difference between the cheapest and most expensive CFD brokers. Typically, competitive CFD brokers will charge no more than 0.1% of the position size, or, a minimum of between $8 and $10 per transaction, whichever is greater.

The cheapest commission rate we have seen in the industry is 0.1% for regular traders, or 0.08% for traders who turnover high volumes. In our opinion, no one should pay any more than 0.125% for brokerage.

Although it doesn’t seem like much of a difference, excessive commissions will add up over time and could mean many hundreds, if not thousands of dollars difference over the course of a year and beyond. Remember, this is money that could be better off in your pocket, if not your trading account!

The other part of the fee structure when it comes to CFDs is the interest charge. Because CFDs are a leveraged instrument, essentially what takes place when taking a position is that you put up a deposit, known as the margin requirement, and the CFD broker puts up the rest.

Like with any other financial institution, when you borrow money from a CFD broker you will be charged interest on the position.

As with the commission rate, although it doesn’t seem like there is much difference, it can and will add up over time if you choose a CFD broker with interest charges that are too high.

5. A platform’s reliability and functionality. Although difficult to assess at the beginning, once you have begun trading you want to make sure the trading platform that you are using is not prone to crashing, and that the functionality of the platform includes standard features such as quality live price charts with technical indicators and news feeds.

IG Markets Find a CFD BrokerBased on all of these considerations, Egolis’ preferred CFD broker is:
 
IG Markets, click to open an account.
 
IG Markets offer a quality platform backed by strong customer service, they are very competitive in terms of fees and commissions, and they cover the widest range of markets of any CFD provider that we’re aware of.

Find an Online Broker

This minimalistic type of brokerage firm provides investors with a basic trade execution platform – at very low cost.

Online brokers are not qualified to provide personal investing advice. This brokerage model best suits experienced traders looking for a low cost trading platform with little guidance.

Find an Online Broker HC SecuritiesEgoli recommends HC Securities
 
Open an account with HC Securities today.
 
How to Open an Account
 
Simply visit the HC Securities website at www.hcsecurities.com.au and select the ‘Join Us’ tab. From there, you will answer a few questions, submit your details and HC Securities will have your account open in no time!

Find a Full Service Broker

Traditional or full service brokerage firms offer personalised financial advice to investors.

As this level of advice requires a lot of one-on-one attention, they typically charge the highest brokerage fees. This brokerage model best suits beginner investors that are willing to pay high commissions for a very specialised service.

HC Securities Find a Full Service BrokerEgoli recommends HC Securities

Open an account with HC Securities today.

Services offered by HC Securities

  • Trade Australia Equities, Options, Warrants, CFDs, Futures (incl. E-minis) and US Shares.
  • Trade over the phone, by email or online.
  • Have an experienced Client Advisor manage your account – at no additional fee!.
  • Receive FREE weekly trade recommendations sent straight to your email or mobile phone!
  • Gain access to Capital Raisings and IPOs.

How to Open an Account

Simply visit the HC Securities website at www.hcsecurities.com.au and select the ‘Join Us’ tab. From there, you will answer a few questions, submit your details and HC Securities will have your account open in no time!

Find a Broker

In stock broking, as with life, what you pay for isn’t always what you get. It’s important to take your time to find a broking firm that’s right for you.

To make this review process less onerous on our valued readers, we at Egoli have taken the liberty of compiling the most important services and features to look for in a broking firm – irrespective of what model you choose.

Customer Service – Customer service ranks number one on our list of desirable traits in a broker. You can verify this by contacting the broker firsthand. Signs of poor customer service include getting placed on hold for extended periods of time, or having to listen to an array of automated phone menus before getting a hold of a live person.

Phone Trading – Surprisingly not all brokers provide phone trading. This is most common with online brokers. Interruptions to your internet connections and computer problems can stop you from accessing the information you need at critical points. This is why it is crucial to have alternate trading access to your broker.

Brokerage Rates – This is the rate at which you are charged for buying or selling an instrument through your account. This rate can vary dramatically depending on a multitude of factors, such as how the trade was placed (i.e. online or over the phone), the size of the trade and the broker/execution platform you have chosen to place the trade through.

Find a Broker HC SecuritiesEgoli Recommended Broker: HC Securities
 
Click to find out more about HC Securities.

Self Managed Super Funds (SMSFs)

Running your own super fund is becoming an increasingly popular strategy. This information is especially useful if you are currently a SMSF trustee, or are thinking about becoming one.

Getting started

What is a Self Managed Super Fund?

  • Has less than 5 members;
  • Each individual trustee of the fund is a fund member;
  • Each member of the fund is a trustee;
  • No member of the fund is an employee of another member of the fund, unless those members are related;
  • The trustee can be a corporate entity;
  • No trustee of the fund receives remuneration for his or her services as a trustee; and
  • A SMSF is registered with, reports to and is regulated by the Australian Taxation Office

Setting up an investment strategy

The trustees of an SMSF are required to prepare and implement an investment strategy for the superannuation fund. The strategy must reflect the purpose and circumstances of the fund and take into account:

  • How to maximise member returns while having regard to the risk;
  • Appropriate diversification in a long term investment strategy; and
  • The ability of the fund to pay benefits as members reach retirement, and other costs incurred by the superannuation fund.

Trustees must make sure all investment decisions are made in accordance with the documented investment strategy of the fund and should seek investment advice or appoint an investment manager in writing if in any doubt.

Research

View research commissioned by ASX demonstrating the growth in popularity of SMSF and the current landscape in which they operate.

SMSF Education & Roadshows

ASX investor roadshow – Self Managed Super Funds
Taking control of your retirement savingsWith the recent underperformance of many managed super funds, running your own and taking control of your super is becoming an increasingly popular strategy. However, it isn’t as simple as just setting up an account with your broker to be ready to start trading in your Self Managed Super Fund. There are government obligations that must be met, an investment strategy to put in place, and finally, not all products listed on ASX are allowed or suited to an SMSF. This roadshow will cover these points and is aimed at both existing SMSF trustees and those thinking about becoming one.ASX provides a range of online classes for people interested in investing in the share market.  These are general classes and are not SMSF specific.

Finding an SMSF adviser

What to look for:

  • Efficient low cost administration;
  • Full explanation of the requirements and responsibilities of trustees of SMSFs;
  • On-time annual reports plus performance updates and newsletters;
  • Availability – can you reach your adviser easily?
  • Competitive fees for investing, management & insurance premiums;
  • Clear detailed information on investment strategy, performance targets, investments and managing investment risk;
  • Track record for showing returns to trustees and all fees and costs;
  • No large outstanding legal claims or one-off costs.

Source.

Online shares courses

ASX has developed a range of online courses. These courses cover the essentials of investing in shares.

Having trouble accessing the classes? (PDF 58KB)

We welcome your feedback on these shares courses.

Screenshot of What is a Share online course

1. What is a share?

Learn about what a share is, what the sharemarket is and how you can buy and sell shares.

Estimated time to complete: 10mins.

What is a share? – text version (PDF 628KB)

Screenshot of Why and How to Invest online course

2. Why and how to invest

Learning how to invest is an important skill. This course looks at the reasons people invest in shares, the main investment areas and how to start investing. Learn the key features of an investment plan including how to analyse the risk you are comfortable with, timeframes, financial goals, the amount to invest and effective diversification.

Estimated time to complete: 10mins.

Why and how to invest – text version (PDF 264KB)

Screenshot of Risks and Benefits of Shares online course

3. Risks and benefits of shares

Shares present benefits as well as risks. Learn about these important considerations as well as some insights into why share prices go up and down. Find out what dividends are and how franking credits work.

Estimated time to complete: 10mins.

Risks and benefits of shares – text version (PDF 320KB)

Screenshot of What to Consider in an Investment online course

4. What to consider in an investment

Evaluating investment opportunities is easier if you use a standard set of criteria to measure and compare them. This course looks at the main methods of investment evaluation.

Estimated time to complete: 15mins.

What to consider in an investment – text version (PDF 218KB)

Screenshot of How to Buy and Sell Shares online course

5. How to buy and sell shares

This course looks in detail at the process of buying and selling shares. It explores choosing a stockbroker, buying and selling shares, settlement of your trade, CHESS, and off-market transfer of shares.

Estimated time to complete: 15mins.

How to buy and sell shares – text version (PDF 344KB)

Screenshot of Trading Simulation online course

5b. Trading simulation

It’s time to practise what you have learnt. Use this course to practice the steps in researching shares and placing orders to buy shares with your stockbroker.

Estimated time to complete: 15mins.

Screenshot of Record Keeping online course

6. Record keeping

As an investor in the sharemarket you will need to follow some simple record keeping practices. This course steps you through this process. The course will also look at reading the financial press and describes the different types of shares that can be traded on ASX.

Estimated time to complete: 15mins.

Record keeping – text version (PDF 301KB)

Screenshot of Market Indices and Market Sectors online course

7. Market indices and market sectors

Keeping track of your share portfolio is easier if you understand the language of the sharemarket. This course describes what the All Ordinaries is and how to follow the market using the sharemarket indices.

Estimated time to complete: 15mins.

Market indices and market sectors – text version (PDF 186KB)

Screenshot of Sharemarket Investment Strategies online course

8. Sharemarket investment strategies

There are a number of different approaches to investing in the sharemarket. This course introduces the importance of understanding the sharemarket’s context in the broader economy. The course also details the pros and cons of investing directly or via a managed fund. Gearing and margin lending is also explored along with the important aspect of when to sell.

Estimated time to complete: 15mins.

Sharemarket investment strategies – text version (PDF 535KB)

Screenshot of Fundamental Analysis online course

9. Fundamental analysis

Annual reports, balance sheet analysis, dividend yield, PE ratio – learning to assess a company’s financials is an important skill. This course introduces the concepts of fundamental analysis.

Estimated time to complete: 15mins.

Fundamental analysis – text version (PDF 506KB)

Screenshot of Technical Analysis online course

10. Technical analysis

Every picture tells a story – sharemarket price charts can be a valuable tool for assisting your investment decisions. Technical analysis is the study of price charts. This course will introduce learners to different chart types, moving averages, support and resistance lines.

Estimated time to complete: 15mins.

Technical analysis – text version (PDF 267KB)

Source.