The number of online stock traders in Australia has doubled in two years
The number of people trading stocks online in Australia has doubled in the past two years as the pandemic and low interest rates have prompted more people to invest.
Figures provided to The new daily by Investment Trends showed that in June of this year, 1.4 million Australians had online trading accounts, up from 750,000 in June 2019 and 1 million in December 2020.
âThe appearance of the crown really increased the number of online traders because people had more free time,â said Kurt Mayell, research manager at Investment Trends.
Because of this extra time, people were interested in learning a new skill.
âThis movement has been particularly visible among people in the younger age groups,â Mr. Mayell said.
The collapse in interest rates, which brought savings rates down to almost zero, also encouraged more people to invest.
Earning next to nothing from their money in the bank, they looked for new ways to get ahead financially, Mayell said.
Of the increase in accounts to 1.4 million, “over 250,000 were new entrants to the market while the rest were dormant customers who had returned after being out of investments for a while,” said Mr. Mayell.
Many of the new investors were young people.
Of those who had an online brokerage account in June, 17 percent were under 30 and 13 percent were between 30 and 34 years old. Those over 45 accounted for 45 percent.
The rise of online accounts has also led to changes in the way advice is accessed.
In the past, investors usually had a securities advisor or broker to help them plan their transactions. But now that has changed.
“It’s less of an ongoing relationship and more of a transaction-oriented financial advice,” said Mayell.
This means that people will seek out an advisor to guide them on an ad hoc basis when a problem arises and pay for it separately.
The costs of online brokerage have fallen dramatically in recent years.
CBA’s Commsec can trade stocks for as little as $ 10 in brokerage fees, while Think Markets offers trades for $ 8 and SuperHero for $ 5.
For traditional telephone service brokers, costs can be around 0.3% of the value of each transaction.
Want to get involved? Here are some points to consider
There are several key points to consider when considering trading for the first time.
The first is to âunderstand the business,â said Rob Goudie, director of Consortium Private Wealth.
This means that you need to do your research on the companies in which you plan to buy shares.
Understand the product and its place in the market and try to get a feel for the business model of the business.
The second point is diversification.
âDon’t put all of your eggs in one basket,â Mr. Goudie said.
Spread your capital over several stocks or sectors.
âIt can be done very cheaply today through ETFs (exchange-traded funds) or managed funds,â Mr. Goudie said.
âETFs can give you exposure to the best and biggest companies in the world. “
ETFs offer a wide range of investment options and provide access to global equity markets.
âThere are cybersecurity ETFs, cryptocurrency ETFs, ethical options, or sectors like tech and green energy,â Mr. Goudie said.
Remember, however, that the market is high right now – and if there is a correction or a crash, it doesn’t necessarily mean that your investment choice isn’t right.
In these situations, it’s best to hang on, because “a rising tide will lift all boats when the market turns,” Goudie said.
However, if there are issues specific to your investment that are driving it down, you may need to consider your position and exit, he said.