Setting up an ETF portfolio using SelfWealth, Computershare and Sharesight

A few months ago, I decided to get back into investing. We had sold our apartment years ago and the proceeds had just been sitting in an online savings account. The fact that interest rates were getting lower and lower in Australia prompted me to look for alternative places for our savings and I had been reading up and listening on podcasts about exchange traded funds (ETF).

ETFs are investment funds that are traded on a share market, such as the ASX.  In this post, the words “ETF” and “share” can be used interchangeably.  When I refer to buying an ETF, I’m referring to buying a share of an ETF on the ASX.

While I had invested in a managed fund in the past,  I had never bought shares directly before. This post sets out the steps I followed to set up my ETF portfolio.

Why I chose SelfWealth as a brokerage platform 

To get started, I needed to open an account with an online trading / brokerage platform.  A trading platform is pretty much what it sounds like, it’s an interface that allows you to buy and sell shares. There are plenty of comparison websites which can help with deciding which platform to go with.

I decided to go with SelfWealth because they are one of the cheapest, offering a flat brokerage fee of $9.50 per trade.  In comparison, the Commsec brokerage fee is $10 up to and including $1,000 and then $19.95 over $1,000 to $10,000.  I planned to invest in parcels of between $2,500 and $5,000 so already I could see that SelfWealth would work out better for me cost wise.

What are the trade offs? Well, the Commsec platform offers more advanced features in terms of share market insights, however it is possible to sign up with Commsec without buying any shares and access those features.  I didn’t consider market insights overly important personally because I only intended to invest in ETFs rather than individual stocks.

One of the major disadvantages of not going with Commsec is that you give up the ability to buy shares instantaneously without having the cash in your account. The reason this wasn’t a deal breaker for me was that I didn’t plan to “time the market” so I wasn’t too fussed with the fact that I’d have to transfer funds into my SelfWealth cash account and have them clear into the account before making a purchase.

In terms of security and peace of mind, SelfWealth is CHESS sponsored, your shareholdings are in your name and the cash account you get assigned is actually an ANZ trust account.  This means that if SelfWealth was to go under, you could transfer your shareholdings to another broker and any cash you had in your cash account cannot be accessed by any administrator/liquidator because it’s held on trust on your behalf.  SelfWealth doesn’t own your shares, you do. They simply provide the platform that enables you to buy the shares.

Signing up with SelfWealth

Another incentive to sign up with SelfWealth is that if you use a referral link, they offer both the referrer and you five free trades, that’s almost a $50 saving.  My referral link can be accessed by clicking here, if you are interested in signing up for the five free trades.  The five free trades need to be used within one month of sign up, so I would hold off signing up until you’re ready to buy.

The sign-up process was relatively straight forward and ID is verified online. It does take a few business days to get everything up and running because they have to set up your cash account and your holder identification number (HIN).  A HIN is a unique number that is issued to you by the ASX when you become a client of a broker such as SelfWealth. If you already have a HIN and wish to transfer over to Selfwealth from your current broker, that is also possible.

Once the cash account was set up,  I was able to BPAY the funds into the account and they arrived around one business day later.

Buying shares using SelfWealth

I downloaded the SelfWealth app and bought my first ETFs on there, rather than on the website. The app is straightforward to use.  These are the steps to buy shares:

  1. click on the contents icon in the top left hand corner
  2. click on “place orders”
  3. enter the stock code or name for the share that you want to buy and click on it
  4. press on the “buy” option
  5. write in the quantity or value of shares you want to buy
  6. choose whether you want to place a “market then limit” order or a “limit” order.  A limit order is where you specify what price you are willing to buy the share at, and your order will not be executed unless there are shares at that price.  A market then limit order is an order being placed against the best offer when buying shares. If there are insufficient shares in the market to complete the order the remaining balance of the order is placed in the market at the best opposing bid/ask price until more buyers or sellers are available at that price
  7. set when your buy order expires, which can either be within the day or a particular date that you can input

Even though the brokerage amount of $9.50 will be displayed at the time of placing the order, don’t worry, if you have free trades, these will be applied to the order. And that’s it! Once purchased, the shares show up in the dashboard and portfolio sections of the app.  My initial purchases were approximately 10% VAE, 45% VAS and 45% VGS – all Australian domiciled Vanguard ETFs.  Because I knew that my free trades would expire within a month, once I made the three core purchases, I used my last two trades essentially buying a tiny amount of shares in order to use up the cash that was left over in my cash account.

A word of warning…be prepared for a mountain of paper to arrive in your mailbox. I’m not sure why in this day and age so much paperwork is necessary for every share purchase, but for now that’s how it is.

Registering a Computershare account

Okay, so let’s recap. At this point I have my SelfWealth trading account on which to buy and sell shares, a holder identification number (HIN) issued to me by the ASX and the shares which I have bought.  In order to manage my shares, I also needed to register an account with Computershare.  Why? Computershare is a share registry through which Vanguard ETFs (and many other shares) can be administered.

I needed a Computershare account in order to manage the details for my Vanguard ETFs and to set up a dividend reinvestment plan (DRP).  Enabling DRP on all my holdings means that rather than receiving any dividend payments, I automatically reinvest dividends paid on the shares, free of brokerage and other transaction costs, into purchasing more shares.  It is definitely the way I wanted to go, in order to get the most out of the compounding effects of my portfolio.

To register a Computershare account, wait for your HIN to arrive in the mail.  When registering on Computershare, they will ask you to put a letter in front of your HIN.  A quick google told me to put an X in front, and this worked for me.

Registering a Sharesight account

The final step for me was to set up a Sharesight account. Sharesight is a share portfolio manager, which is free for up to 10 holdings.  The main reason I signed up with them is because I read that they provide a very helpful report for the purposes of calculating capital gains tax (CGT) at tax time.  Because of this, I wanted to set up my account with them as soon as possible, as a “set and forget” task.

Set, forget and reinvest

And that’s really it for me, since an ETF portfolio is a very hands off approach to long term investing.  I must admit though, it’s been very hard not to sign in and look at the price movements everyday! My goal is to save and continue adding to my portfolio in $3,000 parcels.

I hope this was a helpful guide for first time share investors.  This post was not paid or sponsored.

That Career Girl

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