A straight forward Stake Review. Australians, NZs and soon, UK traders looking to find a cheaper option when trading US stocks have a new option – Stake. This stake review is going to look at both positives and negatives of the platform and see if Stake is worth it. The analysis is going to looking at the platform and give an honest opinion about it.
If you don’t have a Stake account, you can create one here.
If you sign up and fund your account within 24hrs, you (and I) get a free stock! How good!
If you’re interested to see how Stake performs against another up and coming online trading platform, check out Stake vs Etoro
Quick overview of my Stake Review
- Good points
- allows fractional share purchases (i.e. buy $100USD of Amazon instead of the full share price)
- regulated within Australia
- you can buy the underlying asset for US Stocks
- Massive US stocks and ETFs availability
- Commission-free trading
- OK points
- you can transfer stock holdings in and out to other platforms (within reason)
- Tiered trading features pricing. The more you pay, the more trading features you get.
- Good search function (you can search for subjects like ‘shoes’)
- Provide dividends but no Dividend Reinvestment Program (DRIP). Leverages the W-8Ben tax form.
- Deals in USD as their base currency
- Bad points
- Enforces a T+2 Trade Settlement – This means the cash for executed sell orders takes 2 days to clear back into your trading account
- Sorting of search results is limited
- Limited to US stocks/ETFs only
- Only use 1 watchlist for stocks
Stake background
Australian digital brokerage company Stake launched in 2017, designed to give Aussies access to Wall Street — home to some of the biggest financial markets in the world such as the New York Stock Exchange.
Matthew Leibowitz founded the company. He was a lawyer by trade who switched to the world of trading because of his interest in the “dynamic nature of the stock market”. After noticing how big the US market was, Leibowitz realised how complicated it was for people outside of the US to access it unless they were wealthy. And thus, Stake was born. Stake – which has an app and a website – allows you to trade more than 3,500 stocks on the US market.
So, at the end of 2019, Stake has around 30,000 Australian customers.
Getting Started – Stake Review
Signing up to Stake is pretty easy. It has the usual identification/verification questions with the added step of taking a selfie with the submitted identification. It was quick and efficient.
You can create your Stake account here – if you sign up using this link, you get a free stock (now it is either Dropbox, Nike or GoPro)
It has a simple and easy sign up method.
Stake Review – Platform
The platform is minimalistic and there is something very appealing about it. There are no fancy features or too many options – it is simple and straight to the point. One of the main reasons that it is so simple is because you do not see what other traders are doing. The focus is on yourself and your trades. If all you need is to buy/sell trades, then this could be the perfect setup for you. The platform is broken down into 3 sections.
Search
The search function is steps ahead of the others like the eToro search. The best thing I love about their search function is the ability to easily filter to what you need. You can apply different filters until you find what you need. That also suggest different search topics via a snazzy subject line at the top, which rotates through several choices that could spark interest. To me, the best feature is being able to search via subjects, rather than just by name. If I searched for cannabis, it would show me the stocks with cannabis in their name but also the keyword cannabis. I am presented with all the related stocks in the cannabis industry by selecting the keyword. Very useful if I cannot quite remember the stocks name but I know the industry.
One thing that does bother me is the ability to sort by columns the way I like it. For example, I cannot sort by name. Whilst it is not the end of the world, simple features like this do make life a lot easier. When you dive into a stock you like, you are present with a clean outlay and easy to understand information. Stake offers a chart, recent data, news on the stocks and related stocks. Do you need more than that? If you do require more analysis, you will need to seek it elsewhere. If not, then this is a great setup to get information cleanly and quickly.
Dashboard
The minimalistic layout continues into the dashboard. Here you get no-nonsense and straight forward details. What you have invested in, units, value and returns. If you are after only those analytics, then this is perfect for you. For certain trades, I know what I am investing in, so I do not need all the bloatware that comes with other platforms. I just need to know how it has performed day by day and my overall return. For this, Stake is ideal in presenting this information.
Watchlist Stake Review
When searching for various stocks, you can add them to your watchlist by clicking on the ‘eye’ symbol on each row. I would like to have more than one watch list though (so I can group different ones together). If you only have a handful of stocks you are following, then Stake is suitable.
Stake Review – Platform Overview
If you like clean, no fuss, minimalistic platforms then you cannot argue with Stake being the superior platform. The Stake App is similar to its website in a good clean, easy to navigate formula.
Stake Review – What can you trade?
For what Stake lacks in the breadth of offerings, it more than makes up for it in depth. What you see is what you can invest in.
US Stocks & ETFs
When it comes to investment opportunities, the US stock market is where it is at. Access the world’s biggest companies, the next generation of game-changers or get involved in the most active ETF market on offer, including access to inverse and leveraged ETFs.
On Stake, you can invest directly in over 3,700 US-listed stocks and ETFs. All these shares are listed on US exchanges such as the NYSE and NASDAQ etc.
There are also more than 200 ADRs (American Depository Receipts) of global companies that trade in the US market that you can access on Stake. American Depository Receipts (ADRs) offer investors a means to gain investment exposure to non-US stocks without the complexities of dealing in foreign stock markets. They represent some of the most familiar companies in global business, including household names such as Nokia, Royal Dutch Petroleum (maker of Shell gasoline), and Unilever. These and many other companies based outside the US list their shares on US exchanges through ADRs.
One thing I love about Stake is that they list all of their stocks/ETFs – this information is publicly available and you can check them out – click here.
IPOs
On Stake, you can trade a new listing on the day of its IPO. So, when a company announces its IPO, you know that you will be able to access it on day 1 on Stake.
What they don’t offer
- Margin Trading
- Short selling (different to short exposure ETFs like SQQQ or FAZ)
- Options
Stake Review – Trading offerings overview
Stake offers commission-free trading, which is an excellent way to entice traders. If you want depth and no-nonsense trading, then Stake is suitable. Unfortunately, they don’t offer Australian shares to trade.
Stake Review – Types of trading orders
The platform offers straight forward trading options but a fair warning. Stake has three levels of brokerage packs. Now (until July 2020), you can utilise all 3 for free. This is Stake taking advantage of more traders jumping online and is a smart business idea. Show the traders what they can get, then take it away. Leaving them wanting more.
Limit Orders
A limit order is an order to buy or sell a whole number of shares at a specific price or better.
A buy limit order can only be executed at the limit price or lower, and a sell limit order can only be executed at the limit price or higher. A limit order is not guaranteed to execute. If not executed, a Limit Order will expire at the end of the U.S. trading day if it is not executed before market close.
Stake does not offer Good-Till-Cancel (GTC) orders.
Limit orders will be rejected if placed more than 5% above (for buys) or 5% below (for sells) the current market price.
Market Orders
A market order is an order to buy or sell a stock at the best available price. Generally, this type of order will be executed immediately.
However, the price at which a market order will be executed is not guaranteed.
A market order on the platform can be placed at any time but will only be executed when the market is open.
Stop Order
A stop order becomes a market order when a stop price is triggered. A buy stop order is entered at a stop price above the current market price, while a sell stop is entered at a stop price below the current market price.
Note that the stop price needs to be 5 cents below (for sells) and above (for buy stops) the current market bid or offer, respectively. All Stop Orders remain queued until it is executed, or you delete it. This means they do not expire at the end of the day (like Limit Orders do).
An example of a Stop Sell Order is below:
Joe has some TSLA shares that he would like to sell if the price drops below $800. He places a Stop Sell order on Sunday for $800. The stock continues trading above $800 until Friday’s trading session when TSLA opens at $785. A market order is immediately triggered, and the shares are sold. John exits the position at $785.
Pattern Day Trading Rule
The US regulation has certain restrictions and rules in place to protect individual investors from taking on too much risk. One that applies to trading on unsettled funds is the Pattern Day Trading (PDT) rules.
This only applies to Stake Black customers as they are trading on unsettled funds. The PDT rule only becomes an issue after January 2021, as all Stake Black is currently only available to customers with $30K or more in their accounts.
The PDT Rule
The basic premise of the PDT rule is that you cannot make more than three-day trades (buys and sells of the same share in the same day) in a “rolling” five-day period. This 5-day period may not be a calendar week, it is any 5 trading days in a row.
This rule does not apply if you have $25,000 or more of equity in your account.
Breaches
The potential risk of being marked as a Pattern Day Trader is that you may not be able to make day trades for a certain period (90 days).
Minimum & Maximum order size
The maximum size of an order in the US market is 10,000 shares, but you can place as many orders (subject to your cash or holdings) under that amount.
The minimum trade size is $10.
Fractional investing
Instead of buying individuals shares, you can invest smaller dollar amounts (minimum $10). For example, if one Google share cost $1,200, you have the option of investing just $100 if you choose. If you invest $1,800, you will own 1.5 shares.
T+2 Trade Settlement
The settlement time for the US market has a settlement period of T+2 trading days. This means the cash for executed sell orders takes 2 days to clear back into your trading account. The settlement date for all trades is available on the trade confirmation.
Customers who are on Stake Black can re-invest with these funds before they have settled. For those who are not trading on unsettled funds, Stake provide you with a calendar of settlement amounts to show you when those funds will be available in your account.
Trading on unsettled funds
Trading on unsettled funds is available as part of Stake Black, their premium brokerage pack. Until January 2021 Stake Black is free of charge for those with account values over US$30k. For a detailed overview of trading on unsettled funds, how to access it and the regulations that sit around it, please read this blog post.
Stake REview – types of trading overview
If you do not need all that fancy stuff, then Stake is a great choice. Simple and non-cluttered.
Stake Review – Deposits and withdrawals
Depositing Funds
You can make an FX transfer of Australia dollars into USD on Stake. You will get direct access and visibility to the spot FX rate with full transparency of any fees. The minimum amount you can fund is $50AUD.
Ways to fund – Stake Review
You can transfer AUD into USD on Stake using:
- Bank Transfers (with POLi)
- Debit or Credit Card (there is a 60-day hold before you can withdraw funding made by card for security reasons).
Your funds go directly to their FX partner and then into your brokerage account. You can fund and place a trade in the stock market on the same day.
For non-individual accounts (such as SMSF and Company accounts), Stake provides you with a linked Macquarie Cash Management account which is also available to fund with. Customers with SMSF and Company accounts will receive the details (BSB & A/C #) of the CMA with instructions on how to fund their accounts.
Speed
When you fund your account, you can choose the speed (express or regular) you want it in your brokerage account. With express funding, your funds will be in your account and ready to be invested just a few hours later.
Getting Free Stock
When you fund your brokerage account (AUD into USD) for the first time on Stake, you will get a free stock of Nike, Dropbox, or GoPro. All you need to do is fund within 24 hours of your account opening. Simple as that.
Card Funding & 60 Day Holds
Funding by card (debit or credit) is subject to a 60-day hold period before you can withdraw those funds. This is for compliance reasons, and to provide an additional layer of security against fraud. You will be able to see the amount that is always available for withdrawal in your Cash Available for Withdrawal in Stake. For more information, please see Withdrawing Funds
Direct USD transfers
You can fund your account directly if you have USD already, or would like to transfer any currency (like AUD etc) into USD using your bank or preferred FX remitter (such as OFX, XE, WorldFirst etc).
Making a direct deposit
The key banking and transfer information for your accounts will be found inside your Account tab on Stake.
Within the section “Direct USD Transfer” your specific transfer information is provided – it is unique to your account and ensures that if followed, your transfer will arrive as you planned.
To make a direct USD deposit, please also ensure you follow the information in this section.
Correct Details
Ensure the details of your transfer, found in the “Direct USD Transfers” section, are entered correctly with your FX provider. Match your reference number exactly as included.
No 3rd party transfers
Ensure that the name on the remitting account is an EXACT match to your Stake account Stake are NOT able to accept fund transfers otherwise, for any reason – no related company accounts, friends & family accounts etc.
Transfer and other fees
Make sure that you are aware of the feeds provided by your bank or FX provider (i.e. wire fees etc). Stake charges a flat USD 5.00 fee which is passed through to their US broker-dealer to reconcile and undertake fraud checks on each transfer.
Notifying Stake
Once you’ve made your Direct Deposit, be sure to let us know on their Direct Deposit form and attach your transfer receipt. Stake will keep an eye out to make it processes as quickly as possible. Please note that Stake is not able to view the status of this transfer until funds arrive in the US with DriveWealth.
Things to note
Please note that withdrawals cannot be made USD to USD. All withdrawals must come back through to your local Australian bank account.
Link an Existing Macquarie CMA
If you already have an existing Macquarie Bank CMA, you can link it to your Stake account. This gives you great flexibility in moving money across and it will become your default funding method when transferring AUD to USD on Stake.
Linking your CMA to your Stake account
To link your CMA to Stake, you will only need to fill out section 1 & physically* sign section 6 of the attached Third-Party Authority Form. Stake will manage the rest! Once complete, please scan the entire form and send it back to them at support@helloStake.com.
By completing this form, you grant Stake general authority over the CMA, which allows us to arrange transfers from your CMA to your US trading account. These transfers are always initiated and requested by you on Stake. It also means you can see the balance of that account on Stake.
Withdrawing Funds
You can withdraw your available funds any time from Stake. Much like funding your account, the spot FX rate and all applicable fees will be provided to you before you decide to process your transfer. The minimum amount you can withdraw is $5 (USD).
Transfers can only go from Stake to your local bank account, which must be in your name. Before you make your first withdrawal, you will need to provide your bank details (BSB & Account Number).
Speed
It normally takes approximately 2 business days for the withdrawal to arrive in your local bank account.
Security
Make sure you enter the correct bank account details and verify your withdrawal. Stake will ask you to double-check and then validate your transfer.
As an additional check, which ensures the security of your funds, Stake have extra validation on withdrawals and may contact you or request extra documentation. This ensures your details are correct and prevents any fraud on your account.
Available funds & Reserved Cash
You will only have funds available for withdrawal when your settled cash balance is greater than the amount of any cash that is reserved for:
- any holds on funds for funding by card, which has a 60-day hold period
- any pending buy orders (i.e. any order you must buy stocks).
This amount (Reserved Cash) may be greater than your portfolio value due to market fluctuations (i.e. you funded $1000 by card 30 days ago, but your current cash value is only $900). If this happens, you will not be able to make a withdrawal until your portfolio’s cash balance is greater than this amount or the 60-day hold period on your card funding has passed.
Stake Review – Deposit and withdrawal overview
It’s simple and to the point. Stake is awesome based purely on simplicity.
Stake Review of Fees
No brokerage fees
This is probably the easiest section to write. As Stake does not use leverage or CFDs, there are no brokerage fees. Zip, Nada, naught. No brokerage fees or commissions.
How does Stake make money?
No brokerage? But CommBank charges $20 each time… Sounds like a poor business plan. Well, Stake makes money on the currency exchange when you fund your account or withdraw money from your account.
Currency exchange fees
- FX fee: $0.70 for every AU$100 transferred, which is an FX spread of 0.7%.
- Card fee: If you choose to fund your Stake account using a credit or debit card, you will be charged 2% of what you transfer by the card merchant.
- Express transfer: If you want your money to arrive in your account within the next 24 hours, you will be charged 0.5% of what you transfer.
- US tax form: When you sign up to Stake, there is a one-off $5 fee for US taxation purposes.
- External transfer fee: If you already have US dollars that you would like to transfer into Stake, there is a $5 transfer fee applied.
Stake Review – Fees overview
Straightforward and simple is Stakes take on fees but limits you in the types of trades you can do based on your brokerage plan. If you are a simple buy and hold trader, then Stake is the way to go for simplicity.
Stake Review – Affiliate and promotions
The platform has two nice features when it comes to affiliates and promotions. The first is gift-giving.
They also allow you to give shares as a gift; you can purchase as little as USD $10 or as much as USD $500 worth of shares in a company of your choice, and that amount of shares is then sent to whomever you’re gifting them to.
Invite a friend
If you get one of your friends (or someone reading your article) to sign up to Stake, they will you are your friend and you a free stock. Once they make a deposit, you both get a stock. No questions asked.
This is my referral code.
https://helloStake.com/referral-program?referrer=josephm745
Now, it is a random selection from GoPro, Dropbox, or Nike… not a bad result
Tax compliance
When trading in US stocks, Stake makes you fill out a W8-Ben US tax form to avoid paying 30% tax instead of 15% on your profits to the US government.
Stake doesn’t send tax information to the Australia Government and it is up to the trader to provide these details during tax time. Please consult an accountant to help you at tax time.
Safety
Regulatory & Partners
Stake works work with several partners to deliver a seamless, intuitive, and safe investing experience. Some of the regions in which Stake and its partners are regulated include in the US, the UK, across Europe and Australia.
In Australia, Stake is an authorised representative (Authorised Representative No. 1241398) of Sanlam Private Wealth Pty Ltd (Australian Financial Services Licence No. 337927).
Stake Partners
Stake’s FX transfer partner in Australia (and globally) is OFX (OzForex Limited), an ASX listed FX transfer service. OFX enables Stake to provide customers around the world with a more competitive and seamless FX service inside the Stake product. The company manages the FX transfers for Stake customers and sits behind each transaction ensuring that customers funds are transferred in a timely and affordable way to your US brokerage account. It is regulated globally, including in the United Kingdom by the Financial Conduct Authority (FRN: 902028), in Australia by ASIC (AFS Licence number 226 484) and in the USA as a licensed money transmitter (NMLS #1021624).
DriveWealth provides the US brokerage and execution services to Stake and its customers. It is connected to the relevant exchanges to ensure that orders are executed in accordance with the client’s instructions. DriveWealth, LLC is a US broker-dealer registered with FINRA (US regulator) and is a member of SIPC, which protects securities customers of its members up to $500,000 (including $250,000 for claims for cash). You can read more about SIPC at www.sipc.org.
Stake work with several other regulated partners to bring better & safer access to the US stock market, including:
- Trulioo – For the digital verification services required to meet their KYC and AML requirements
- Macquarie Bank – providing bank accounts for non-individual accounts (SMSF, Company accounts)
- Tiingo – their data provider for market and company data you see on Stake
- Poli (Australia Post) – A payment gateway for faster online funding
Safety & Security
With Stake, there are lots of ways your cash, securities and data are safe and protected.
Their Partners
It is worth noting that Stake never holds or touches your money – your money goes directly to their regulated FX partner (OFX) and then onto DriveWealth. When you withdraw your funds, it is the same, just the other way back!
Your cash and securities in the US are held in custody for your benefit with Citibank, one of the world’s largest banks.
Insurance
The US broker, DriveWealth, LLC is a US broker-dealer registered with FINRA (US regulator) and is a member of SIPC, which protects securities customers of its members up to $500,000 (including $250,000 for claims for cash). You can read more about SIPC at www.sipc.org.
This protects you, as a non-U.S. citizen with an account at a brokerage firm that is a member of SIPC. Stake customers are treated the same as a resident or citizen of the United States.
No more Stake
In the unlikely situation that Stake goes down, you would still have access to all your cash and securities. their broker partner, DriveWealth and the custodian (Citibank) will establish access for customers if anything happens to Stake.
Account security
You have full control of your account and can enable advanced security in the form of 2 Factor Authentication (using an app like Google Authenticator or Authy) at any time.
Data
Stake work to meet the highest standards of the privacy regimes in Australia and all the markets Stake operate. As Stake are also a UK regulated firm, Stake adheres to a privacy policy that is set out in accordance with GDPR.
In terms of storing data, Stake encrypt and store all your data securely with AWS.
Stake Review conclusion
Stake has its benefits and you will be able to find out if it is the best platform is for you. If you are a simple straight-forward trading platform, with a clean interface, low fees and plethora of US stocks and ETFs to choose from? Then Stake is more suited to your style. One thing for sure is that Stake is more enticing to me than the big 4 offerings particular for no brokerage fee.
What about you? Is Stake for you? If you want to check out another platform, look at eToro in my Stake vs eToro review.
Nice one