Selfwealth Review – is it safe, or any good?

I have no company interest in or sponsorship by SelfWealth, and this is my unbiased review of using SelfWealth over the past two years to buy shares in Australia. I do have an affiliate code I was given by SelfWealth that you can use to sign up and get 5 free trades. Just make sure you have a good read of this article first to make sure its right for you.

Bottom line up front on SelfWealth

Self wealth is simply the cheapest, most effective and easy to use online brokerage tool for Australians on the path to Financial Independence.

Using SelfWealth to purchase ultra low cost index tracking ETFs such as Vanguards VTS and VEU, and the Betashares A200 fund once per month is quite possibly the smartest and most passive thing you can do to grow your wealth.

Plugging your data from SelfWealth into a free ShareSight account means once per year you can log in and download all of your required portfolio management accounting statements for your tax return. Hand this to your accountant and have them submit your return, removing all of the headache and drama of the usual tax time accounting shit fight.

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Introduction to the SelfWealth Review

I aim to be as transparent as possible and I publish my Net Worth updates every month. I also write very detailed articles explaining my investment strategy, what financial products I use, what investments I make, their performance, my spending habits, income sources, and just generally why I do what I do.

CaptainFI
Part of making this site was because I was sick of repeating myself to other aircrew – now I just flick them a link to articles on here and hope they don’t clue on its me here

Even after that, my inbox still gets flooded with hundreds of questions about which broker I use and what I personally invest in (its all freely published in the net worth update guys!), and people asking directly for financial Advice.

I try to get back to everyone, but its important to realise that I cannot offer you financial advice and I am not a financial adviser. This blog is my efforts to document my journey to Financial Independence and explain the choices I have made for my personal circumstances, along with my reasoning and explanations, in the hope it might inspire change and better choices in everyone. For a hot stock tip – check out investing in DYOR 😉

Of course I have mentioned this a few times, but in Australia everybody knows the best the discount online broker for those on the path to Financial Independence is SelfWealth. That’s because its the cheapest brokerage.

I switched SelfWealth from ComSec after hearing about it from the Aussie Firebug, and learning just how much cheaper it was. I personally enjoy dealing with SelfWealth as they have a simple to use and eye pleasing website and phone app, but what really keeps me there is the industry beating price.

Overall I am quite satisfied with their service in general and SelfWealth offer everything I would expect from my broker. Because of all the interest and emails, I decided to take this topic out of the Frequently Asked Questions tab and expand it into a fully dedicated article all about the discount online broker SelfWealth!

Captain FI readers can even use this link to get their first 5 share purchases completely brokerage free (a value of $47.5)

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What is a stock broker

First of all, as explained in the articles starting to invest in shares in Australia and Investing in shares for beginners, to buy shares you will need a Broker. A broker is the agent that places your buy (or sell order) on the stock market. In Australia, this takes place on the Australian Securities Exchange (ASX).

To coin a metaphor, they are almost like a car dealership; They don’t make the cars (the manufacturers do that), but they help you get what car you want and they take a small service fee for connecting you with the manufacturer. They don’t register the car (the RTA does that) and once you’ve bought the car and driven off, they don’t really do anything else for you!

That is how a broker works in general. They help ‘Broker’ a deal between two parties and take a small service fee or percentage of the deal for the privilege. Other examples include Mortgage Brokers who help customers find the bank with the best deal (lowest rate home loan), and even Livestock Brokers who help farmers sell their cattle or sheep.

Back to stock brokers, or share brokers. These are a required third party who helps connect buyers and sellers of shares (such as ETFs). Gone are the days of visiting an actual broker or financial adviser who would act as this third (or fourth party). These days, thanks to the internet, you can do this all much more quickly, cheaply and easily online. Enter the world of the discount online stock broker!

broker
No more need to visit dodgy financial planners or ‘stock brokers’ anymore

Discount online stock brokers

Due to the rise of popularity and the ease of conducting business online, many of the big banks now offer online stock broker platforms. These are mostly considered non-advisory brokers which don’t offer any advice regarding your financial situation and whether what your doing is a good idea or not.

This is a good thing, as advisory brokers start to wander into the area of active financial advisers which are statistically proven to under perform even a basic total stock index fund in 87% of cases!

However, even some non-advisory brokers will provide varying levels of ‘market research’ and advertising to try and convince you to make more trades or to trade more frequently. Remember that these brokers make their money every time you trade, so it is in THEIR interest for you to trade more frequently, NOT YOURS! Every time you make a trade, you make yourself poorer so remember to have some discipline and trade only when necessary as part of your investing strategy (for example I usually only buy index funds once a month).

Discount online stock brokers are generally great for people on the path to FI, as we know that getting wealthy is not about picking stocks to beat the index or timing the market to buy low sell high. In reality, this is a fallacy that is perpetuated by the financial industry to transfer money from the impatient to the patient.

Beware there are no get rich quick schemes! Smart investors know real wealth generation is about living below your means and investing the difference into low fee index funds and leaving it there to compound and grow over time! Low fee’s and continual disciplined investing are the crucial keys, so a Discount online stock broker is your friend here.

Some of the biggest discount online stock brokers in Australia

There are literally hundreds, if not thousands of brokers out there. Some of the biggest ones in Australia are shown below.

These all have varying pros and cons, and almost all of them charge the standard high industry brokerage fees (or even worse, percentage fee’s which rack up even higher transaction costs) and try to encourage you to stock pick and trade more often. I actually started investing with ComSec (commonwealth banks financial division) before I learned about the importance of low fees and came to my senses after reading a post by the Aussie Firebug.

Whilst you could happily use any of these services to invest in index funds and ETFs to reach financial independence, in my opinion they are not as efficient as they could be and thus will slow down your progress to reaching FI. They also all share one common negative trait….

… They are NOT SelfWealth!

The best online stock broker: SelfWealth

selfwealth

So, with that out of the way, lets finally talk about SelfWealth! SelfWealth are my choice for a discount online stock broker, because I feel they have the best service out of all of the different brokers I have tried, and because they have the cheapest brokerage fee.

SelfWealth is the best choice for an online broker for those on the path to financial independence.

Where did SelfWealth come from

SelfWealth was established in Australia by Andrew Ward in 2012 as a FINTECH (financial technology) start up that offered a new solution to the age old investment dilemma – how do I invest smartly without losing a bunch of my cash to transaction costs and brokerage fees.

By using modern technology and adapting to our modern business practices, SelfWealth are able to offer an industry leading flat fee brokerage cost of only $9.50, regardless of the size of the trade. Personally when I was investing, I was getting dinged for $30 bucks a month with ComSec, and now that bill has been cut by two thirds! This is because other brokers scale their brokerage fee with the trade size, to charge more for essentially exactly the same service!

SelfWealth has since even listed on the Australian Stock Exchange – you can read about it here, although I don’t know much about this and am not personally a share holder.

The Team that created and run SelfWealth

SelfWealth is run by a dedicated team with headquarters in Victoria, Australia. Their management team list their bios on the SelfWealth website here.

The Founder and CEO of SelfWealth is Andrew Ward. Andrew has over two decades experience working in the financial services industry. Andrew studied a Bachelor of Economics at Sydney University as well as a Diploma in Financial services (planning).

Andrew Ward
Andrew Ward, Founder and CEO of SelfWealth

He initially worked with large financial firms, and then transitioned to working in a variety of roles around the world in management and consulting. He finished his time working as an employee for Commonwealth bank as an Executive Manager for Commonwealth Private lending, and then branched out with his knowledge and skills to launch Self Wealth!

Their staff also includes;

  • Andrew Dick, the Chief Technology Officer,
  • Brendan Mutton, the General Manager – Sales,
  • Tania DeVincentis, the Client Service Manager, and
  • Jarrod Purchase, the General Manager – Marketing.

What features do SelfWealth offer

Self Wealth offer both a conventional website client browser based login as well as a secure phone/tablet application. although, the only feature you should really care about is SelfWealth’s website. Once a month log in, buy your ETF, and then log straight back out, close the laptop and walk away!

selfwealth app
SelfWealth offer both a web client and a phone/tablet application protected by encrypted user password login (and quick digit pass) with full trading functionality

Of course, I am a realist and I know you won’t really do that. You’ll probably do exactly what I used to do and download the application on your phone and log in every hour or two to just ‘Check how the portfolios looking’.

STOP. Stop doing that! Don’t hawk-eye your portfolio, it just encourages you to trade more frequently and as we discussed earlier, this just erodes your wealth and undermines your journey to FI. Your self worth is not linked to your net worth, just let it quietly grow in the backround. To quote Jeff Bezos…

“Don’t feel smart if your portfolio grows by 30%, because that just means if it drops by 30% then you’ll have to feel dumber.”

Jeff Bezos, founder of Amazon LLC, NW over USD $145 Billion.

I won’t lie, I often use the phone application to conduct my monthly trade, I find it extremely convenient especially when I am all over the world for work and often its a pain in the arse to fire up my laptop (I wouldn’t log into any financial account on a public computer or non-secure Wi-Fi). Many times I have actually even made my monthly ETF purchase on my phone using the application, whilst cruising along at 36,000ft over the ocean in international airspace. Thanks Satellite Wi-Fi!

SelfWealth offer some ‘Widgit’ like information such as a ‘Wealth check’ and a ‘Safety Rating’. Personally I don’t pay any attention to those since I know my core foundation of 100% world diversified index tracking ETFs is the best way to reach Financial Independence – that’s right, I’m not drinking the ‘Bonds’, ‘Cash’ or ‘Fixed interest’ to reduce volatility financial industry coolaid. Volatility means nothing in the long term since it all averages out, and I can even make it my friend to benefit from buying LICs that are undervalued!

Why I like SelfWealth as a broker

I like SelfWealth for a couple of reasons, but the biggest factor of all is price. Ultimately the lowest price possible is what drew me in, but I was impressed by their streamlined and easy to use platform, and customer support (naturally I had a lot of questions I wanted answering before I transferred my holdings from ComSec to SelfWealth).

SelfWealth have the lowest cost brokerage in Australia at $9.50 flat fee per trade

They are a no frills service and offer a flat fee of AUD $9.50 per trade. They don’t try and scam you by charging percentage transaction costs of your trades to claim higher fees, and there are no ongoing monthly fees or other commitments for the basic profile.

SelfWealth are fully CHESS sponsored which means my shares are protected and in my name

You’ve probably heard about many micro-investing companies like Raiz, Spaceship or Comsec Pocket. There are international ones too like Robinhood. I don’t know much about these companies, but what I do know is that some of them aren’t even CHESS sponsored – you can read more about micro-investing on Nicholas G. Muscat’s website The Aussie Money Man if your keen, but I think you already know my opinion of them…

Being CHESS sponsored means the ASX keeps tabs on whats happening within the company, and provides the company’s customers with a unique holder identification number, or HIN. This means YOU directly own the shares, and NOT the company; ergo if the company goes bust, you do not lose your shares.

This means that even if SelfWealth go out of business, you will not be financially ruined. It will be annoying because you will have to find another (presumably more expensive) Broker, but the transfer will be fairly straightforward.

You can read more about why this is so important here

SelfWealth don’t spam my inbox trying to make me trade more frequently

They don’t spam my inbox and they don’t try and scare me into trading more often. I know they offer a paid service for more information, but as someone on the path to financial independence, I know that keeping my fees down is crucial to maintaining a low cost of living, and achieving financial independence.

I also practice the low information diet and stick to my core investing strategy of passive index tracking ETFs for my portfolio and some old school LICs thrown in when I can buy some more stable dividends whenever they trade under market value.

Selfwealth have a great no frills account that is easy to use and have 24 hour fast online customer support

So I don’t need any whizz bang graphs or trading information – just the basic ability to be able to buy the index funds and receive the dividends using the basic no frills free account. All of my portfolio tracking and yearly tax accounting done by ShareSight anyway (and then handed to an accountant for lodging), and you can check out my review of ShareSight here.

To keep costs down, they use an online support system where you can generate a ticket and be helped by an online consultant. This worked great and was super quick, my ticket was resolved almost instantly and gave me the information and reassurance I needed to help transfer my holdings from my previous broker (ComSec) to SelfWealth. I couldn’t get on the phone to them which annoyed me at first, but this is how they are able to keep such record low fee’s and provide such a good service.

Selfwealth compliments my journey to Financial Independence

To be honest investing in Betashares (I invest in A200) and Vanguard (I invest in VTS and VEU) ETFs bought using SelfWealth and managed with ShareSight is probably the simplest and easiest way I can think of for Australians to reach financial independence.

I wish I could go back in time and tell my 16 year old self this, instead of having to struggle through hundreds of books and thousands of hours of reading and research to figure it out for myself. Your lucky to be reading this and benefiting from my mistakes!

It is critically important to realise that you cannot control the market, you can only control the fees you pay along the way. This is why SelfWealth is so complementary to an index ETF investing style; you get all of the benefits with only a fraction of the costs!

SelfWealth is an industry leader that is changing how Australians invest, and making investing more accessible for everyone

Don’t take my word for it, go and do some of your own research. You’ll see that they didn’t win Money Magazines ‘Best of the Best Award’ for cheapest online broker for three years running for nothing.

They have also won numerous awards such as Optus business awards FINTECH business of the year, the IFA Excellence award Innovator of the year and the Australian business Awards software innovation award.

SelfWealth is now a mature FINTECH start up which has brought the fight to the big banks, and has challenged the status quo of how we as people individually invest. I for one stand with them (and their lower fees!)

SelfWealth has an easy to use integrated cash trading account that is backed by ANZ

SelfWealth users will automatically get a linked ANZ cash trading account which is easy to use. Just like any other account you receive a BSB and bank account details in order to transfer money into it. Transferring money out is just as simple, and is done using the SelfWealth online browser or app. You can transfer money out into any nominated linked external account.

Some people find this a little clunky since it takes a few days for cash to transfer in both directions, but I have personally found it only ever takes a day or two. I guess it is annoying, but by planning my purchases in advance I don’t really notice it at all. It’s worthwhile remembering the old adage ‘Haste makes Waste’ and if your really tight on cash, that’s what your emergency fund is for, bro!

Whenever you make a trade, this is where the money will come out of or go into during settlement.

How to sign up to SelfWealth

SelfWealth

Signing up to SelfWealth is pretty straightforward. Its totally free and you don’t even have to transfer any of your holdings across if you don’t want to – you can start a completely new HIN and list of holdings – although I chose to transfer my holdings across.

Bear in mind, the process is not instant due to strict government anti money laundering regulations there process takes a few days as the required checks and balances need to be done. Personally, my SelfWealth account took 4 days to set up, and I had settled my first share purchase within the week!

Information you will need for an online SelfWealth Application

Before you start the application process, you will need to make sure you have the following personal information details ready

  • Your personal details (Name, address, DOB, contact details etc)
  • If you want to transfer shares from an alternate broker you will need your previous HIN (usually starts with an X)
  • Your bank account details you wish linked in order to transfer cash INTO and OUT of the SelfWealth Brokerage cash account.

Types of SelfWealth account you can create

There are a few different options when completing the online application, depending on your personal circumstances. For example this table comes directly from the SelfWealth website regarding what types of SelfWealth accounts are available

SelfWealth accounts
SelfWealth offer a variety of account types

Steps to open a Self Wealth account online

  1. Click the link here to sign up.
  2. Register your details; enter your contact details, create an account password and review the Terms of Conditions (and accept them).
  3. Verify your email by clicking the verification link sent to you by SelfWealth.
  4. Complete the online application.

How to buy Shares using SelfWealth

Buying shares using SelfWealth is just about one of the easiest thing I have ever done. I will give the example of how to use SelfWealth to buy some Vanguard total US stock market index fund ETF (ASX:VTS) shares.

Step 1 – Log into your SelfWealth Account

Lets assume your using the web browser. Open up the SelfWealth homepage and click ‘login’ in the top right hand corner. Once logged in, head on over to your Dashboard on the left hand side of the page – under ‘TRADING’ select ‘Place Orders’

SelfWealth ETF
Step 1 to buy your ETF. Go to ‘Place Orders’ in SelfWealth Trading Tab

Step 2 – Place a buy order on SelfWealth

Clicking ‘Place Orders’ will open up a screen ‘Place Orders – Buy and Sell’. To place a trade for a specific ETF, enter the ASX ‘short code’ or the ETF name in the ‘Search Stock: Code or name’ bar.

SelfWealth ETF
Step 2

In this case, we are going to place an order for VTS – Vanguards total US market stock fund ETF. We type ‘VTS’ into the search stock bar, and select ‘BUY’ which populates the Quote tab on the right hand side

SelfWealth ETF

Fill out the quantity tab (100 selected here) and then select ‘Limit’ for your Price type. The limit price ensures you don’t buy anything above this price (and similarly, when selling a stock ensures you don’t sell anything below this price).

Limit orders are the sensible price type to use – market orders will mean your cost fluctuates with supply and demand – it could cost you more or less (the ASX is obliged to give ‘everyone’ the best deal they can and settle on a fair price).

Note that now the Quote tab on the Right Hand Side is now populated – 100 shares at $220 per share now shows you a cost of $22,000 plus $9.50 brokerage (note this is about a third of the Brokerage you would expect to pay with other online brokers).

SelfWealth ETF

Simply play around with the ‘Quantity’ and ‘Price per unit’ tabs until you are satisfied with the deal. When your ready, click ‘Review order’ which will take you to a confirmation page. Simply then confirm the order to make it go live.

Your order will now be placed in the cue at the Australian Securities Exchange, and when a seller is matched to your buy order, the trade will be executed and the shares will transfer to your name, and the money will be deducted from your brokerage account.

Hot top – make sure you have enough money in your brokerage account to settle the trade (don’t worry, this is a self correcting error as it wont let you make the trade if you don’t have the cash).

Step 3 – Settlement of your trade on SelfWealth

The trade normally takes T+2 or 2 days to settle, by which time you will get a confirmation from the share registry that the shares are now listed in your name, and you will be asked to confirm your details, link a bank account and whether you wish to participate in any Dividend Reinvestment Plan (DRP) if its available for your ETF.

Personally I dont use DRPs / DSSPs / BSPs since I love the endorphin rush when I see dividends hit my account – I get a feeling of almighty power! I suggest using your brokerage account to receive dividends since it makes it easy to keep track of everything come tax time (its all in one account and you can just print the statement).

Since VTS specifically is a cross listed fund domiciled in the US, you will need to fill out a W-8BEN-E form to send to the US internal Revenue Service. This is because Australia and America have a tax treaty; the form will stop you getting taxed at the full rate by both countries. Your share registry will facilitate this submission and many have templates that are super easy with informative guides on how to do so. Not all ETFs are cross listed, and many are changing over to get domiciled in Australia now so you won’t have to do as many of these forms.

Step 4 (optional) – Import or confirm your SelfWealth trade with ShareSight for tax record keeping purposes

sharesight

This is optional, but it is good practice to keep a record of your trades for tax purposes – you need to be able to calculate your share cost base if you ever sell for capital gains tax purposes, otherwise the Australian Taxation Office will kick your arse.

I personally use ShareSight since its totally free if you have under ten shares (making it perfect for ETF holders) and it fully generates a complete tax statement for all of my share purchases, sales and dividends I receive. ShareSight can also import your SelfWealth data making it super easy.

You can check out the comprehensive review I did on ShareSight Here, where I even got to chat to their content manager and ask him a bunch of curly questions.

Still having issues using SelfWealth?

If your still having trouble buying Shares using SelfWealth, Rather than reinvent the wheel, check out this awesome Video tutorial from the Aussie Firebug!

Summary of CaptainFI’s SelfWealth Review

SelfWealth in my opinion is the best way for Aussies to buy shares, especially Australians on the path to Financial Independence. This is because of the low fees, and general no fuss, no frills, simple and easy to use system.

If you think SelfWealth is the right choice for you, go ahead and create an account and see what its like – you have nothing to lose. You have the option to transfer your holdings from a previous broker or create a new investment account with them and just trial how it goes.

Captain FI readers can even use this bonus sign up link to get a 90 day premium subscription trial for free ($60 value) as well as their first 5 trades completely free, ($47.50 value) saving over $100

CaptainFI

If you want to learn more about SelfWealth, check out this awesome poddy they did with the Aussie Firebug here

I would like to point out that this is not a sponsored post, SelfWealth have had no input into this article other than when I reached out and spoke to a number of their staff members on the phone and via email to try and learn more about their business. I have no monetary affiliation and sponsorship with SelfWealth other than the sign up code which you can use to receive reciprocal free brokerage on 5 trades (NB when you sign up, you can share your code to others as well through their referral program).

2 thoughts on “Selfwealth Review – is it safe, or any good?

  1. Just signed up for SelfWealth… now having to wait a few days for it to all get approved. Hope it works

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