The number of active online share traders continues to increase with 635,000 Australian investors placing at least one trade through an online broker in the 12 months to November 2015.
The result was part of a survey of 13,910 investors and traders by Investment Trends. The report also found that last year first-time share traders drove growth in the broking industry.
“The market had robust growth throughout 2015, underpinned by an influx of first-time online investors,” said Investment Trends senior analyst Irene Guiamatsia said in a media statement.
Guiamatsia highlighted market events that were driving the growth in online broking including the bull run in the first-half of 2015 - now a distant memory to some!
More and more Australians are now wanting more control of their money. Investors are less likely to outsource their investment decisions to a wealth manager or adviser. This is reflected in the number of self-managed superannuation funds (SMSFs) being established. SMSFS now total around 570,000, according to statistics from the Australian Taxation Office
Demand for online trading will only increase. There are two major types of broking services available to Australian investors.
In addition to transacting shares on your behalf, a full-service broker provides investors with advice and recommendations. On other end of the spectrum, investors can use an online broking service, which was typically known as a discount broker.
Online broking is now very much part of investing as the recent statistics from Investment Trends show. Investors are recognising the benefits of going with an online broker.
Moreover, the proliferation of digital has equipped consumers with more information than ever before and made it easy for them to find information on investing and their money. Also digital innovation has opened up new ways to trade stocks. Fore example, investors can now trade using apps on their mobile phones.
Cost is one key factor in using an online broker with trades for a parcel of shares typically costing around $30. These fees are only charged when you buy or sell the shares.
Trade execution through online broking is also easy and transparent.
Although online broking may not provide all the bells and whistles that a full-service broker provides, many of these brokers are no providing innovative products to their online services.
There were a number of platform innovations that were introduced in 2015, says Guiamatsia and highlights nabtrade’s launch of its integrated international share offering as an example.
According to the Investment Trends research, more than one in two (57%) of online investors were able to mention at least one broker innovation that they found useful.
“This places Australia second on innovation recognition among seven key markets in the world including the US and UK,” Guiamatsia says.
Investors can look to the comparative product website Canstar for award winners when they are comparing online brokers.
View The investment landscape has changed infographic here.
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