I want to start trading! How can I find a broker? | Guest expert Danielle Ecuyer

HOSTS Maddy Guest & Sophie Dicker|20 April, 2021

Meet your hosts

  • Maddy Guest

    Maddy lives in Melbourne, works in finance, but had no idea about investing until she started recently. Her favourite things to do are watching the Hawks play on weekends, reading books, and she says she's happiest, 'when eating pasta with a glass of wine'. Maddy began her investing journey when she started earning a full time income and found myself reading about the benefits of compound interest in the Barefoot Investor. Her mind was blown, and she started just before the pandemic crash in 2020. What's her investing goal? To be financially independent for the rest of her life, and make decisions without being overly stressed about money.
  • Sophie Dicker

    Sophie lives in Melbourne, and enjoys playing sport, and then drinking red wine immediately after finishing sport. She works in finance, but honestly had no idea about investing until her partner encouraged her to start. She says, 'my interest has only taken off from there - I find it exciting… I mean who doesn’t like watching their money grow?' Her investing goal is to build the freedom to do things that she's passionate about - whether it be start a business, donate to causes close to her, or to take time out of the workforce to start a family. Right now, there’s no specific goal, she just wants to have the freedom when she'll need it.

Choices, choices, choices! You’ve decided to take the plunge and buy shares, but how? Where? Well, if you’ve got a bank, you’ve probably got a broker! In this episode, we’ll break down what a broker is, discuss how you can work out which broker is for you, and answer some of your broker questions. We want to debunk the classic Wall Street image – because these days buying or selling shares isn’t necessarily an old dude calling you up and asking if he can look after your money… In fact, it can be as simple as downloading an app, filling out some details and just… clicking buy! Don’t believe us? In this episode we’re joined by Danielle Ecuyer, author and founder of Shareplicity, who answers all our burning questions.


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Maddy Guest: [00:00:57] Hello and welcome to another episode of your good company, a podcast with like minded people who want to make smart investment decisions. I'm Maddy and I'm here with my good friend Sophie. [00:01:08][10.5]

Sophie Dicker: [00:01:08] Good morning, Maddie. How are we today? Good. That's good. As always, I'm so excited today because we are finally getting to that episode about Brokers', which I think is probably been like the most common Özkan, the most like the topic that we've gotten the most questions about. But before we start today, we would like to acknowledge and pay respects to the one three people of the island nation who are the traditional owners of this land on which we are recording today. We pay our deepest respects to the elders past and present and to the next generation who we hope to create a different future for. [00:01:43][34.3]

Maddy Guest: [00:01:44] So so we have talked all about the wive investing. We've broken down some of the and homes you need to know and the importance of getting your money goals under control by breaking down risk, ambivalent about how you can invest to build a portfolio to suit your own risk profile. [00:01:59][15.3]

Sophie Dicker: [00:02:00] So pretty much you've just given a summary of what we have achieved so far, which I feel like is quite a lot. [00:02:06][5.6]

Maddy Guest: [00:02:06] Yeah, I mean, I hope so. Now, we have talked so much about and people talk about all the time the stock market and buying shares. But I remember so clearly when I started out having no understanding whatsoever of actually where or how to do it. It is such a foreign concept. [00:02:24][17.2]

Sophie Dicker: [00:02:25] Yeah. So funny that you say that, because the other day I was speaking to a friend and she was like, don't, don't, don't think this is like a dumb question. I go, where do I what do I like Google to me like like is there a place that I have to visit, like Deutsche Bank? Like do you someone like you call someone? Because I fully can relate to that. When you first start, you're like, why is this like a separate service? Do I have to like, is someone going to do it for me? Like it all does get pretty confusing. [00:02:52][27.8]

Maddy Guest: [00:02:53] I completely agree. How did you first stop? [00:02:56][2.3]

Sophie Dicker: [00:02:57] So when I first started, I had Dad helping me kind of set up an account. So I set up an account with ANZ to start off with because that was like the bank that that I was using and it's. [00:03:07][10.6]

Maddy Guest: [00:03:07] And did he tell you to use ANZ or. [00:03:09][2.0]

Sophie Dicker: [00:03:10] Well, I guess it was just kind of like a natural progression because it was the bank I was with. And then pretty much you just you're setting up another account. So you've got like a savings account and then you set up like the ANZ share trading account. I think it's cold. So you go on, log on. And I literally do like new username, new password, and then you can transfer money into that account from your savings. But then as I progressed into my investment journey, I kind of moved to CommSec and a couple of different other Birkerts that I'm trying out at the minute just because it was something that my friends were on and I wanted to be able to converse with them about how to use like the apps. So it's like good to have someone, I guess, using the same thing that you can, like, ask questions to and stuff [00:03:49][38.8]

Maddy Guest: [00:03:50] if your friends are using it. And I think it's a good sort of like user experience, because I think that's one of the biggest things about picking one of those platforms is what is easiest to use for. You know, when I started out, I mean, I honestly had no idea. I think a friend told me what he was using and I just went with that. I think I did a quick Google to look at phase, because phase of pretty important aspect will touch on this a lot more later. So I think I did a quick comparison. And when I realized that self-worth, which is what had been recommended to me, it was pretty competitive on phase. I just went with that. And I mean, I have switched around a couple of times, but I've stayed pretty loyal to self-help because I really like the platform. And I think, yeah, whatever is user friendly and whatever works best for you is what is a great option. [00:04:36][46.0]

Sophie Dicker: [00:04:36] Yeah, I feel like we touched on this a little bit as we get into the chat with our guests today. But it's a very personal decision and you've just got to go with what works for you, I guess. [00:04:45][8.5]

Maddy Guest: [00:04:45] Yeah, for sure. We are now going to jump into it and into Danielle Aquia to answer some of our biggest broker questions. Or at today, we are talking to Danielle Akuetteh. Danielle has been involved both professionally and personally in share markets in Australia and overseas for over three decades. Lucky for us all, she has bought all of her knowledge and experience together to create one of our all time favorite investing books. Yet you're in good company. Share Felicity, a simple approach in investing. Welcome Danielle. [00:05:16][30.4]

Danielle Ecuyer: [00:05:16] Welcome, Danielle. Thank you so much for having me. [00:05:18][2.5]

Maddy Guest: [00:05:19] We're so excited to speak to you today. We're going to start off with some quick fire questions just to get to know you. The first question is, what is your morning routine if you have one? [00:05:28][8.6]

Danielle Ecuyer: [00:05:28] I certainly do. I have always been an early riser. So now that I invest in the US share market, I have a terrible habit where I wake up and I look at the US market and gosh, it's it's an old habit because my work always meant I had to be in the office sort of between quarter past seven and seven thirty in both Sydney and London. So I'm very hard wired to start looking at stock markets very early in the morning. I try now to have a cup of tea, do a wrap of the US market, find out what's going on, and then I go into my next phase, which is exercise. I'm pretty religious every morning about doing some form of exercise and what's about my exercise and my breakfast, my and then basically, even though I'm kind of self employed, I'm ridiculously disciplined. And then I go and I start my workday and I have little tricks. During the week, I kind of catch up with people for coffee or a lunch, depending on how my writing is going or whatever. [00:06:29][61.0]

Maddy Guest: [00:06:30] That sounds great. And Danielle, who what influenced you to invest when you were starting out? [00:06:35][4.9]

Danielle Ecuyer: [00:06:36] Yeah, I was given an opportunity to become a stockbroker in nineteen eighty five. I'd actually done a degree with a major in marketing and I very soon worked out I didn't want to market women's feminine hygiene products or soap powder and I didn't want to work for a multinational. And because I don't really fit, I'm a bit like a square peg in a round hole when it comes to big institutions. And I had this opportunity to join stockbroking firm and I kind of went, hey, there's nothing wrong with making some money because my mother had had a few problems over the years with money and I'd say the trauma that it causes. So I kind of went, I know nothing about this, even though I've done quote unquote, accounting and commerce, economics, it's kind of at the base. It's like, whoa, this is completely different. But that was OK. And that's basically when my journey started. [00:07:31][55.4]

Sophie Dicker: [00:07:32] I feel like that is a very common story. And Maddy and I have experienced that as well, both studying finance and not knowing anything about investing until we dipped our toes in. We can relate. And our final question is, if you are a stock or company, who would you be and why? [00:07:48][16.2]

Danielle Ecuyer: [00:07:49] I kind of feel like I would fit in somewhere in a crazy world of Tesla, somewhere that would really spot. [00:07:55][5.5]

Sophie Dicker: [00:07:58] That's a good one. I like that you could maybe be best friends with Elon Musk. [00:08:01][3.7]

Danielle Ecuyer: [00:08:03] You could do a lot worse than being the best friend with, I mean, is seriously quirky, but incredible. [00:08:10][7.0]

Sophie Dicker: [00:08:12] So we wanted to also ask you a little bit about your book, Simplicity, A Simple Approach to share investing her. Did you write this for and what's what could people expect before reading it? [00:08:23][11.2]

Danielle Ecuyer: [00:08:23] I always wanted to write a book and I actually wrote a manuscript about the wealth creation across all asset classes. And when I approach publishers, I've got a couple of publishers interested. But my current publisher, who I went with, she said, it's great. But you know what? If we want something that's more approachable for our readers, can you do a book on share investing in the web? Hey, yeah, that's easy. And so the process started like let's create the share investing book that's equivalent of the Barefoot Investor for share investing. So I like to think of it that way. But I also like to think that it's not only for beginners, it's also for people that think they know a lot. And then you go, Oh wow, I didn't realize that there was all this other stuff that I didn't know. And that's the thing about investing. It's not a binary proposition. It's not like you either. No. Or you don't know. It's learning. It's a constant, constant learning process. [00:09:19][55.9]

Sophie Dicker: [00:09:20] Yeah, I love that. I think that's great. We both have read the book and if anyone out there is looking for somewhere to sort of go a little bit further and learn a little bit more, we would highly, highly recommend it. Simplicity is a great investing book. So to get into episode a little bit more now, today we really want to break down what is it, Broka? What is brokerage? And basically, I guess that whole well, because it really is its own wealth. So I guess to start off with really basically what is a broker? [00:09:51][30.7]

Danielle Ecuyer: [00:09:51] So a stock broker is basically an intermediary between yourself and the stock markets there. A person that kind of like even though they're called experts, they're basically advisors if you speak to somebody. But a stockbroking firm persay is an institution that is able to facilitate the investment process. So between you making. The decision to buy or sell a share or an ETF, an exchange-traded fund, facilitate the trade and the execution of buying that product. So that basically somewhere between the stock market is a fruit and vegetable market and you're the customer, and then you go and speak to whoever who is serving you. That's kind of like the stock, the stock broker. Effectively, they gather all the things together and facilitate the trade, a new way to pay for it, or you return the goods and they give you some money back. [00:10:48][57.1]

Maddy Guest: [00:10:49] So how have stock brokers changed over time? We know from our experience we've just been downloading apps and testing them out. Has it always been like that? Has it changed over time? [00:10:59][10.3]

Danielle Ecuyer: [00:10:59] A lot of it has changed so much. I wish I could show you a photograph of an old friend of mine who was on. I can probably get out of it, but he was on the trading room floor in the Sydney Stock Exchange in nineteen eighty six. And this was a room predominantly full of young men screaming at these guys that were with Chalkias that they would mark the share prices on a board. Upon a time there was no electronics. Right. It was a really traditional thing where you'd kind of ring up and say, I want to buy one hundred BHP shares. And then I cooled down physically to the stockbroking floor, to my friend to start screaming like you see on trading places. And, you know, those types of programs screaming at someone saying 100 BHP at twelve dollars twenty or whatever. That's how it used to be. And then fantastica, along comes the Internet and computers or more advanced computers. And everything is done online. And there's been a lot of disruption in the whole investing community. Like it is incredible. I talk about it as the democratization of investing, which basically means once upon a time you had to be Kerry Packer to go and buy shares in America because you just couldn't do it any other way. You needed large sums of money. And, you know, there were only a few people that could do that for you. Now, you may everybody can go and buy exposure to shares around the world. And this is all been facilitated basically through the innovation and the Internet. And that is huge. And also costs have come down dramatically. That's the other aspect. [00:12:43][103.0]

Maddy Guest: [00:12:43] So sort of I guess then coming back to today, how many brokers are there? Because I have had of so many different brokers and how many options do we have and how do we sort of navigate that? [00:12:55][11.9]

Danielle Ecuyer: [00:12:56] I think you need to be a little bit careful because not everybody is a broker. So NAB Trade, CommSec, I'm just throwing names out there that brokers there are platforms that are to do other things. So they will put your trades through one of these other big institutions. And I think this is where it gets really, really confusing for people because they kind of go, oh, my gosh, where do I start here? I mean, literally, this is overwhelming, which you probably find in looking at all these platforms. And I'm sure you know more about the platforms than I do. I think you need to differentiate between are you going to manage your money yourself and make a lot of the investment decisions? Do you need input and advice or are you going to go to one of those more automated platforms such as a stockpot or a raise or one of those ones where they facilitate you putting the money in, but you don't make any decisions around where the money goes? [00:13:58][62.2]

Sophie Dicker: [00:13:59] So are you saying that there's brokers out there that can give advice and then there's also brokerage platforms where you can just make the trades? [00:14:07][8.6]

Speaker 4: [00:14:08] Yeah, it kind of works both ways. So if you want advice, you're going to pay a lot more money. OK, so typically in old style, they're what are called private client brokers out there. So if some of your listeners go and ask their parents, they may say, oh yes, Auntie Marge or Uncle whatever role, yes, I have my private client, stockbroker. And then literally you ring up and you go, Hi, Sophie. Hi, Betty. What do you thinking today or what shares do you like? And they go, all our research department recommends you buy Rio Tinto, Commonwealth Bank and you go, Oh, yes, I don't own any of those. I'll buy some of those and then I facilitate the whole trade. Alternatively, this online investing platforms. OK, so that's the NAB trade. That's the context, which is what I use. You can get an advice service with that. I just choose not to because I'm a painter, because I've been doing so long. So and then you have other platforms that provide investment products. To retail investors that are more probably bland or generic so that the exchange traded funds or the ones where you say I've got a thousand dollars to invest, what does your model portfolio tell me to put it in? And they will spit it out once you fill out a form saying how much you want to invest, how much risk do you want to take? How old are you? And they put in all these things and then they spit out at the end what actual shares or funds exchange traded funds you should buy. So unfortunately, it's you need to do a little bit of homework at the outset to work out what's kind of going to work for you, because everybody's different. Everybody has a different amount of money. Everybody has a different amount of money that they want to put in each month. And everybody has a different amount of time that they want to commit to it. [00:16:10][121.8]

Sophie Dicker: [00:16:11] I think that was one of the main things that we really wanted to touch upon today as well. When choosing a broker, you need to make the decision that's personal to you and your goals. And so when you are looking for a broker, in your opinion, what are the most important things that you should be looking at and looking for when making the decision that suits you? [00:16:34][22.6]

Danielle Ecuyer: [00:16:35] Clearly, costs are important. It always because the higher the cost of the purchase or the sale, the more that that eats into the amount of return that you've made on your money. If you're speaking with somebody and you're actually getting advice, it's a very personal relationship. You've got to like that person. But the other big question that you have to say, because most people probably won't go down that route. Most people will probably go down some form of service. And I'm just throwing names out here. They're not recommendations. So if you go to a of funds or Vanguard or whatever, that's very much vehicles designed so that you can save by investing, but you don't have a heavy involvement. So at the outset, you really need to establish how involved you want to be. And if you're not very confident, it's always better to start small and not have to make too many decisions that overwhelm you and you become confused. And then you kind of stock markets go up and down so they can cause this emotional rollercoaster ride. And you kind of want to make that experience as pleasant as possible if you know what I mean. So you kind of grows your confidence over time. So you start with something that's relatively simple and then you can become more and more involved if you want to. [00:17:58][83.5]

Sophie Dicker: [00:17:59] Yeah, I think that's really great advice. And you were mentioning costs in there. Is that are you talking about your brokerage phase there? What are those costs you are referring to? [00:18:08][9.1]

Danielle Ecuyer: [00:18:08] Essentially, it's the transaction costs. So there's two types. There's the transaction cost of buying or selling the share or the product that you're buying into the other type of costs. There are two different ways you can buy shares directly. So you pick the shares or somebody picks them for you. You can buy bundles of shares typically in what's called an exchange-traded fund, or you can buy what's called managed funds, which is basically you give a fund manager a sum of money and they make the decisions for you and they charge an annual fee to do that. In all instances, costs matter. So in the same way as with your deposits on your bank accounts, that if you imagine that you make seven percent to you, you double your money every ten years. Right. If the costs are too high, that's going to also have that compounding effect and erode your return over that period of time. So whatever you decide to go to, it's worth having a look at how much it costs over the time to actually put the money in, take it out, and if it's an external manager, how much it costs them to manage the money for you. [00:19:22][73.4]

Sophie Dicker: [00:19:22] So essentially what you're saying is, is that if you buy some shares on that on a platform, there's a brokerage fee for buying and selling caret. And then if you're giving your money to, say, a managed fund, they'll also be a fee on top of that, that they'll be charging you to do the transaction for you. [00:19:41][18.6]

Danielle Ecuyer: [00:19:41] This, too, is the cost of of of buying them. And then there is also an annual management fee for looking after the money. And you really don't want to pay anything higher than one percent, in my opinion. Even one percent is is pretty hefty. So if you were to buy something like an exchange traded fund, for example, which is a group of stocks that tracks normally an index, they typically should have management fees of around point two point three, maybe point four percent, whereas if you give it to a fund manager. So the likes of platinum or. And although they've been bringing their face down, you can pay in some instances as much as one percent or higher. So the thing is, if it's higher, you need to have a higher return from the performance to justify the fees. [00:20:31][49.2]

Maddy Guest: [00:20:32] So would you have any advice for really deciding which platform is going to be best for you? [00:20:36][4.2]

Danielle Ecuyer: [00:20:37] I hate to say it. It's it's a bit like going to a Mecca cosmetic. You kind of have to try on the makeup. You have to test it. And I really feel with all of these platforms, particularly with some of the ones that have new apps and things, you've got to try it. And that's what my son did when he was looking at what to do because he said, oh, mom is such an old dinosaur, I'm not homesick. And I went, oh, OK. And then he started fiddling around and figure, well, this doesn't work. Oh, I don't like this app. So I hate to say it. It's a very personal choice in the same way as you girls might like pink lipstick. And I've got more red lipstick on to the lipstick on. You're not going to know. And it really is a case of in the same way, it's like which social media platforms do you like? I was listening to somebody the other day and he's like this really super tech nerd and super smart software engineer. And he goes, Oh, I never saw the point of Twitter. And he goes, Oh, no, I just love this. So you kind of it's like investing. You go swimming, you can't learn to swim until you get wet. So I hate to say you've got to fiddle around a bit, download the app, see if you like it. If it's too complex or doesn't make any sense, don't use it. Find something that you personally are comfortable with and you can change. Doesn't have to be set in stone. That's the nice thing. You don't have to have this loyalty over time. Your whole investing process can evolve and develop. [00:22:10][93.0]

Sophie Dicker: [00:22:11] Yeah, well, that was one of the questions we were going to ask. Actually, we were going to ask, are you locked into a broker or can you swap around if you find something that's actually more suited to you, which I think you probably answered perfectly, that we're very lucky we can just download apps and try them out and see if we like them. [00:22:27][16.2]

Danielle Ecuyer: [00:22:28] Absolutely. I mean, I have changed over the years. I think I mentioned in the book like I had this huge career in stockbroking, but when it came to managing my own money to start with, I was terrified. So I literally went through four institutions. Eventually, before the GFC, I said, enough, I'm doing this myself now. So I was like everybody's worst nightmare. I think they saw me come and go, you know, we don't want to manage your money, but that's the whole point. You can mix and match. In fact, arguably, you could probably you know, you could try to if you want to, because I think now that there's so low cost and they make it so easy to invest, it doesn't have to be just one. And you don't have to stay with them for life. [00:23:14][46.5]

Maddy Guest: [00:23:15] Yeah, I think that's a great point because, with a lot of things in sort of finance and money, it's really important that you sort of consolidate, you consolidate your support, you consolidate your savings, that with investing it really doesn't have to be like that. You can definitely sort of shop around a little bit and see what works best for you. [00:23:31][15.8]

Danielle Ecuyer: [00:23:31] Absolutely. [00:23:31][0.0]

Maddy Guest: [00:23:33] Something that's really common, that comes out. Why am I chatting with friends about brokerages and brokerages? Is putting your money with a broker on one of these platforms? Is it safe and are they regulated? [00:23:44][11.5]

Danielle Ecuyer: [00:23:45] I'm pretty sure they're all regulators. But then again, I would only go with one of if you if your personally I tend to stick with larger institutions, that's just me personally. I kind of feel if barring a meteorite hitting the earth, like if the system starts to quake a little bit, that's kind of it's not a plug for because I've mentioned CommSec, it just happens to be with there's a whole lot of big four Australian banks. But again, it's probably worth checking with the institution because I'm not sure with some of the smaller ones how well regulated they are by ASIC, to tell you the truth. So, again, I think you need to do a little bit of homework. [00:24:28][42.8]

Maddy Guest: [00:24:28] We are just going to take a quick break to hear from our sponsors. [00:24:31][2.7]

Sophie Dicker: [00:25:07] Thank you so much, Danielle. That was a really great sort of some great insight into the world of brokerage, so I really appreciate your time on that. We would now love to get your thoughts on sort of a more broad topic, something that we love to do, an episode. We've been getting our guests to add a stock to our watch list. It doesn't have to be a stock. It can be an ETF athame, an industry that you're keeping your eye on at the moment. And the purpose really is to just sort of get us thinking outside the box and really broaden our horizons in the investing space, but are not financial advisors. And this is purely for educational purposes. So it absolutely does not constitute financial advice. What have you bought for us today for the watch list? [00:25:49][42.0]

Danielle Ecuyer: [00:25:50] OK, well, I am a huge proponent on clean energy, the big boom that we're going to have decarbonizing the globe. If we can all strip out the politics that exist in this country and look at it purely from a financial perspective, because I don't want people getting upset with me. But the bottom line is, is that there is a wall of money coming from global banks and investors to invest in this space. And if I had to pick probably above all the ideas and the themes, I've just been writing about this in my second book on American how to invest in US stock markets. And there's lots of great things like this canibus and cloud computing and this genomics spot, the one that I think is really going to be the big, big investment opportunity for the next 10, 20, 30 years. It's within that decarbonization space. Notice the base of has put out a climate change ETF and they've just announced it. And I want to understand how they're picking the stocks in us. But for younger investors with a longer term time frame so you can put it doesn't have to be that long. But personally, with the change of administration in the US, with the Biden administration making a big commitment to decarbonizing America, getting the world moving with Europe, I really think that there is going to be so much money made in that space. And I'm well known for being a Tesla fan and I do a lot of Tesla stock. [00:27:30][100.4]

Maddy Guest: [00:27:31] I think you are really going to relate to a lot of people with that. I think everyone is really thinking about how they can be more sustainable in their personal and professional life. So it's a really great area and I think will be definitely watching that one as well. Our final question for you today, Danielle, is what piece of advice would you give your younger self when you first started out investing? [00:27:51][20.2]

Danielle Ecuyer: [00:27:52] Have more confidence. Firstly, firstly, the thing is, I'll tell I'll do the story as quickly as possible. Right. So I used to go and interview CEOs, etc. when I was a research analyst. And sometimes these men normally would be talking at me, gosh, I don't understand this. And they know what happens. It's usually because they were telling me big porky pies, as in it wasn't legitimate. So what I want to say to people is, if you don't understand, don't invest in it. If there is never a question that is too stupid, please don't be afraid to ask the questions, because I will bet you do. You will ask a question. And everywhere you go, I wanted to ask that question, but they weren't brave enough. And I think it's really important. It's your money. You are. You've worked for it. You've saved for it. Take ownership of all of that. And it's a really rewarding experience down the track once you start the investing journey. But don't worry, you can be as conservative as you want. You can grow your confidence because it is a journey. It's just not you kind of do it once. It is really, I hate to say it usually for the rest of our lives. [00:29:08][76.2]

Sophie Dicker: [00:29:10] That really is fantastic advice. And Danielle, we would like to say a huge thank you for coming onto our show today. I think you are our best written guest on Facebook, frankly, in episode two. So huge. Thank you. You've been incredibly articulate for what can be quite a challenging concept to get our head around. But if people want to find out more about you, are there any social ills that can follow you on or somewhere they can find out more about your books? [00:29:34][24.6]

Danielle Ecuyer: [00:29:35] Absolutely. So I've got a whole website, simplicity.com.au you can download the first chapter for free. This blog post. There's lots of media articles so you can blow yourself senseless. Say the reading about what a person oh what someone's written about what I'm saying all there are podcasts and equally I am active on far too so many social media platforms. I haven't cracked Pinterest yet, but I'm kind of busy, very busy on Twitter. We also have Instagram with this to say, and I'm also on LinkedIn, and so, yes, very easy to spot. I just Googled my name and it all comes love. [00:30:19][43.5]

Maddy Guest: [00:30:20] I love that. [00:30:20][0.4]

Sophie Dicker: [00:30:22] Well, thank you so much again. We really appreciate your time. And we hope that we'll be able to talk to you again in the future any time. [00:30:29][7.3]

Danielle Ecuyer: [00:30:29] It was so lovely to chat to Maddie and Sophie. So any time you want, I'm around. [00:30:35][5.3]

Speaker 2: [00:30:36] Thanks Danielle. [00:30:36][0.0]

Maddy Guest: [00:30:39] that was such an insightful chat with Danielle. Now, we reached out to you guys a couple of days ago to say kind of what questions you had about is just so we made sure that we were tailoring to the things that you wanted to know. And we thought we would take the time now to go through a couple of those outstanding questions. So maybe the first one is probably the most common is how do you actually get your money to a broker? [00:31:02][23.3]

Sophie Dicker: [00:31:03] This is such a good question. It's again, it's just so confusing. What? Yeah. Anyway, I'm going to though. What is there. It's confusing and it's not. It's just feels. Yes. A great it's actually not confusing at all. Basically you just get account details and you transfer money into the account just like transferring a friend. Then when you log into your account, you can literally purchase stocks like your online shopping. It is honestly so easy. [00:31:33][29.6]

Maddy Guest: [00:31:34] Yeah. You have say like your savings account. You're actually talking about an account number or a PI day and it goes into your other app. We for you trading and it pops up there. You can see the amount. Exactly. And I think it depends on what account you use and what you're transferring from like just like when you're transferring to a friend. Sometimes it comes first right away. Sometimes it can take a few hours or a day. So I guess something to be aware of. If you want to be able to take advantage of an opportunity quickly, it might be good to take a little bit of money in there. So you're ready to go. But otherwise, if you're sort of just investing regularly and not too worried about that, you can just sort of transfer as you go. [00:32:08][34.9]

Maddy Guest: [00:32:09] Yeah. Whenever you want. So the second question that we got quite a bit was, is giving your money to a broker risky? [00:32:16][6.6]

Sophie Dicker: [00:32:17] Yeah, this is a really good question. And the good news is the overarching answer is definitely yes. Sorry, you would have it's not over until your answer is the firm has a say. [00:32:28][11.4]

Sophie Dicker: [00:32:29] Oh yeah. Is it risky. Yes. Very risky to not use them. No, we're joking by joking. It's definitely safe. And I was just going to say that all brokers in Australia, they have to follow certain rules that are set out by ASIC. So ASIC is that corporate governance body, I guess, in Australia to the ATO, which the taxes in the ASIC, which looks after more of the business side of things. So every broker has to follow these rules. So the overarching answer, as many said, is that, yes, they are safe to put your money with because, yes, I'm glad we're agreeing with that on that, but know that they definitely are safe. [00:33:10][40.6]

Maddy Guest: [00:33:11] OK, so I guess the flow on part from that question then is there are two different types of brokers. Now, this can get a little bit confusing, but I can try our best to summarize it really, really simply so. The two types are called chess, the other one is custodian. Now, you might say this if you're doing a bit of broker research. So they're going to explain quickly what this means. Now, we'll start with chess. So if you know this Dansville [00:33:36][25.3]

Sophie Dicker: [00:33:37] well, I they know what it stands for because it I looked it up, but [00:33:41][3.9]

Maddy Guest: [00:33:41] I didn't go for this exact purpose. [00:33:44][2.2]

Sophie Dicker: [00:33:45] Yeah. Like, I thought it was like, cool because of the Queen's Gambit, but it's actually just clearing house electronic register. Just so boring, so boring. [00:33:54][9.6]

Maddy Guest: [00:33:55] But basically it just means that the ASX is keeping a list of who owns what shares. That's what chess sponsorship means. And it means that when you buy or sell the shares, the ASX, the Australian Stock Exchange, keeps a record of who is owning those shares directly. [00:34:09][14.1]

Sophie Dicker: [00:34:10] Yeah. So I think the big thing to really pin point there is you own the shares directly in your name. [00:34:16][6.2]

Maddy Guest: [00:34:16] Yeah, that's it. Yeah. So then when you join a chess sponsored broker, you automatically get given an ID and that's called a hidden NHIN to people saying is that A, B [00:34:28][11.2]

Sophie Dicker: [00:34:30] yeah, OK. It probably stands for something to you though. [00:34:32][2.2]

Maddy Guest: [00:34:33] It does its downfall. I also looked this it stands for Huldah ID number and basically you automatically get given a hint and any shares you buy will be attached to you through that number. [00:34:46][12.9]

Sophie Dicker: [00:34:46] So if you buy shares with a particular broker, you just get one win or do you get multiple means? Like if you buy, say, like one hundred shares in BHP, then one hundred shares in Westpac or whatever, do you get to Hinz for those ages? One and all the shares going to the same number [00:35:02][15.5]

Maddy Guest: [00:35:02] one in all the shares gone to the same number if you're doing that. With one broker, if you want to open two brokerage accounts, you get to hands absolutely fine. You can have multiple hands at multiple brokers, you can move your hand and the associated share from one broker to the other and from one hand to another. It really does not matter. There is nothing to be worried about with this whole thing. [00:35:23][20.8]

Sophie Dicker: [00:35:24] OK, so under this model, you own the shares directly and instead of someone else holding them for you on your behalf, which happens under the custodian model. [00:35:33][9.4]

Maddy Guest: [00:35:34] Yes. So for a non sponsored platform. So the other one, a custodian, holds the shares in your interests so you don't own them directly. A custodian holds them for you on your behalf. [00:35:46][12.2]

Sophie Dicker: [00:35:47] So it's like it's like a third party. [00:35:48][1.1]

Maddy Guest: [00:35:48] Yeah, exactly right. [00:35:49][0.9]

Sophie Dicker: [00:35:50] So has there ever been like a scenario where the custodian model hasn't worked? What if the third party, like, what is the third party? Is it a business? Is it a human? What happens if it goes under? [00:36:00][10.5]

Maddy Guest: [00:36:01] Yes. So there's a brokerage company and then there is a separate third party, which is the custodian. So even if the broker were to collapse, you don't lose the shares because it's a separate custodian. Holds them now. Never say never, but a custodian has never gone under before. [00:36:17][16.0]

Sophie Dicker: [00:36:18] Did Justin Bieber write that song about this? [00:36:20][2.1]

Maddy Guest: [00:36:22] Yeah, he wrote about the custodial model. That's actually where he got his inspiration was what I know my. [00:36:30][8.2]

Maddy Guest: [00:36:31] Do they already know [00:36:31][0.6]

Maddy Guest: [00:36:33] you're singing? I think that was lovely. But the thing to note, I guess that's quite interesting is it's really commonplace in the US for brokers to hold shares under this model. So it's very easy. I think it's more new to Australia. So typically in the past, all of our brokers have been sponsored, but it is becoming more and more common in Australia, too. [00:36:56][22.9]

Sophie Dicker: [00:36:57] Yeah, I was going to say, I think around the world, the custodian model is probably the most common and I think they do that a lot because it reduces fees for users because they don't have like all those. I don't even know what the fees are. So I'm not going to actually act like I do know. But I think there's like regulation fees and whatever and and a chest model and they kind of strip that out in the custody and model by using a third party or something like that. I don't know. But I think that's why it's becoming even more commonplace now with user demand wanting lower fees. [00:37:29][31.7]

Maddy Guest: [00:37:30] Yeah. So I guess the reason why we do go into this slightly complicated topic is because a lot of us, when we look for a broker, like I think a really common thing is to tap into Google like low cost broker. And what we're finding is now a lot of the more low cost ones are the custodian model. So it's just good to understand what the difference is. And you can make your own decision with what you're comfortable. But ultimately, they're all really safe and you can make your own decision based on that information. [00:37:55][25.4]

Maddy Guest: [00:37:57] Mad, another question that we got was can you consolidate your shares if you have multiple brokers? [00:38:03][5.6]

Sophie Dicker: [00:38:04] Yeah. So I actually did this just this week. So I'll tell you about my experience. I think it might be a little bit different for every platform that you use. So definitely you can give it a quick Google and find out. But basically all I had to do was fill out a quick form online. You do have to print it off and sign, which was slightly annoying, but that's okay. And basically, you can select individual stocks that you want to move across or you can take a box that says, I want to move my entire portfolio and it's really easy. Then you just send it back to the broker and they can do all of that for you. I do want to also because you've got multiple brokerage accounts, don't you? Can you tell me your strategy or your process with that? [00:38:42][38.7]

Sophie Dicker: [00:38:44] Most of my shares are just on one platform and I have shares in like so I have some amazing ANZ, which I've just kept there because I use their banking platform as is. So it's like I've got that up regardless. So and then I've got another one so I could technically put them on to one app. But at the minute it's not really annoying me because it's just like buy and hold. It's not like I'm a day trader needing to like use a certain platform every single day. [00:39:07][23.3]

Maddy Guest: [00:39:08] Yeah, for sure. But I think would be also telling me because one of the ones that you use has really low cost brokerage. So Dombi, like is it for ETFs, it's free. So you're buying yet your ETF for that. [00:39:19][10.8]

Sophie Dicker: [00:39:19] Yeah, I've been trying out super here, I think for not just ETFs, it's also with shares. But the main reason I was trying that out is because a lot of new kind of things are coming up. And I kind of wanted to test a couple of different platforms just because I've been with my platforms for a while. So it's more for me about like downloading them, playing around with them, saying if I like the information that they produce, you know, some of them have really nice, like graphs and like nice like laid out information, for example, like there's an app called Stake and it allows you to buy shares in the US. And that has like all the top news stories for that company that you're potentially buying into over the past. Know. Yeah, because it's really cool. It kind of gives you that macroeconomic understanding of the company, and I really like that. So I like that app. But I guess for me, I don't want to be buying on to. Platforms, because then I'll be like, where the hell are all my stocks? [00:40:09][49.3]

Maddy Guest: [00:40:09] Yeah, so I guess in that respect, it's really personal opinion that you can have as many brokers as you like. I guess it's just sort of what suits you and what you can keep your head wrapped around. So I guess a quick summary of today's episode, because we have gone through quite a lot of information today. So to start off with a Verka is where we buy and sell our shares. It can either be through your bank or you can do it on an online platform. [00:40:35][25.7]

Sophie Dicker: [00:40:36] So each of these platforms, regardless of whether it's with a bank or an online platform, they will charge a fee, which is called a brokerage fee. And this is every time that you buy and sell your shares. So it's a very important consideration when picking a broker, because if the fees are too high, then obviously you're going to be losing out with the costs that are associated. [00:40:57][21.2]

Maddy Guest: [00:40:58] Exactly. And what about ongoing phase? We have to look out for them as well. Test. [00:41:01][3.3]

Sophie Dicker: [00:41:03] Are you testing me that can resolve ongoing phase. Subscription fees are sometimes involved and they can automate fees such as inactive fees if you're not trading enough. So they just things to look out for. They're not as common. The brokerage fee does occur every time they face. Not so much, but yeah, I guess when you're just choosing a platform just to make sure that those fees aren't there, then maybe there's that big ongoing fee. If you buy into, say, ETFs, can you tell people about that? [00:41:29][25.8]

Maddy Guest: [00:41:29] Yeah. So ETFs generally range between a fee of zero point zero five percent and maybe one percent or just below. So rule of thumb, Danielle mentioned this in our chat. You probably don't want to be paying more than 1000 cent because it just means that you're eating into your returns too much and you have to earn too much Votan in order to really be profiting from the stock. [00:41:50][20.6]

Sophie Dicker: [00:41:50] Too much return is there. [00:41:54][3.4]

Maddy Guest: [00:41:55] And then I guess one thing I wanted to add to that is that brokers and businesses, if you're looking at one and it sounds too good to be true, it probably is. So dig a little bit deeper and have a look at what maybe is sometimes those ongoing fees can be a bit more hidden. So just have a Google, have a look into it, because if it's too good to be true, it probably is. Now, how many brokers can we have available? All of them. [00:42:18][23.4]

Sophie Dicker: [00:42:20] You can have as many brokers as you want. It's totally up to you and how you want to manage that. It's not going to affect you in any way [00:42:26][6.0]

Maddy Guest: [00:42:26] as long as you can mentally keep tabs of how many [00:42:29][2.7]

Sophie Dicker: [00:42:32] Excel spreadsheets out, ladies. [00:42:33][1.1]

Maddy Guest: [00:42:34] Well, I mean, if you think I don't like it, I love it. OK, and then final thing, those two annoying words, chest custodian go [00:42:43][9.3]

Sophie Dicker: [00:42:46] pretty much they're just two different models that the brokerage companies can follow. And when you are choosing a broker, just have a little look which model they're following and make sure you're comfortable with that model. It'll just take a little bit of research. Not a lot, but it's important to understand before you choose your broker. Great. The end. The end. Goodbye, everyone. So next week we're going to do a little bit of a sort of partnership. But I think we were kind of calling it a partnership and it's highly asked for. And we are going to look at all the different brokers that are out there. And all of that raises a lot of brokers out there. But just giving a little comparison or understanding of what each of them look like. And so I guess we're going to be a little bit of your Google for brokers. [00:43:32][46.3]

Maddy Guest: [00:43:33] Well, thank you very much for joining us on today's episode. Don't forget, we have our Instagram. If you don't follow it yet, YIGC podcast? We have got lots of great posts going up and summarizing episodes, posting news stories, posting Tanzy. You need to know then. We've also got our Facebook discussion group, why YIGC Investing Podcast Discussion Group getting used to saying that now that's growing really fast, which is super exciting. People posting, people asking questions. Love it. So get on there and make sure you get involved and ask any questions that you have, because that is an awesome place to, I guess, touch base with people who are on the same journey with you. [00:44:10][36.7]

Sophie Dicker: [00:44:10] And we will speak to you next week. See you next [00:44:10][0.0]


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