CommSec Pocket: Shares Made Easy, A Review

CommSec Pocket is a new App for buying shares on the stock market. It’s an online broker designed to make investing easy and was created by the Commonwealth Bank.

One of the benefits of this App is that is allows you to invest small amounts of money, aka micro-investing. The App is targeted at beginner investors to the share market. Although the ease of use was created with millennials in mind, I found it simple and sleek even though I hark from Generation X.

This App offers seven different ETFs to invest in. The reason only seven is offered is to stop beginners feeling overwhelmed by having to decide from hundreds of different companies listed on the stock exchange.

ETFs are a popular choice for both beginners and those who are experienced with investing. Many people saving for financial independence via dividends from the share market do so by investing in ETF style index funds.

ETFs Unpacked

An ETF is an Exchange Traded index Fund.

When you buy shares in one company you only own shares in that single company which carries risk as all your ‘eggs are in the same basket’.

When you buy shares in an ETF such as the ‘Aussie Top 200’ you are buying into the top 200 companies in the Australian stock exchange – hence ‘your eggs are in many baskets’ which reduces risk.

By investing in an ETF, such as the ‘Aussie Top 200’, you essentially become part owner of 200 Aussie companies – by buying shares in them. And when those companies make money, you – as part owner of the business, receive a share of the profit.

CommSec Pocket ETFs

Seven investment themes are offered by CommSec Pocket. Each of these investment options are given a theme name. The actual ETF name is also provided as well as the ASX code.

A shortcut for finding more information about a company listed on the Australian Securities Index (ASX) is to search by looking up its code.

For example, the shortcut code to Aussie Top 200/iShares Core S & P is IOZ.

Other stock exchange jargon found is the MER or Management Expense Ratio. It’s basically a management fee charged by the ETF. The fee doesn’t come out of your pocket and it’s deducted from the ETFs share price.

Scott Pape, Australia’s Barefoot Investor, has a strict criteria that share fund fees must be no higher than 0.40%. Keep this is mind when looking at the MER.

For more information on Pape’s criterion have a read of the Idiot Grandson Portfolio: Barefoot Investor, A Review

Below is a chart listing the seven investment themes found in CommSec Pocket.

Theme NameActual NameASX CodeMER
Aussie Top 200iShares Core S & PIOZ0.09%
Aussie DividendsSPDR MSCI Australia High Dividend Yield FundSYI0.35%
Global 100iShares Global 100 ETFIOO0.40%
Emerging MarketsiShares MSCI Emerging Markets ETFIEM0.67%
Health WiseiShares Global Healthcare ETFIXJ0.47%
Sustainability LeadersBetaShares Global Sustainability Leaders ETFETHI0.49%
Tech SavvyBetaShares NASDAQ 100 ETFNDQ0.38%

If using Scott Pape’s rule of the MER being no higher than 0.40%, you’ll find that only four of CommSec Pocket’s themes make the cut:

  • Aussie Top 200
  • Aussie Dividends
  • Global 100
  • Tech Savvy

Whilst .09% compared to .67% doesn’t seem like much of a difference, it can have a big impact on your investments.

For example, using the MoneySmart managed funds fee calculator for an investment with a $1,000 deposit and an extra $30,000 deposited each year for 10 years, the difference in fees between 0.09% and 0.67% is $15,525.

Of course, the bigger the investment, the more the MER will eat from your fund.

CommSec Pocket Costs

The CommSec Pocket App is free to download from the App Store or Google Play. There are zero account keeping fees and no ongoing costs or inactivity fees.

One of things beginners will love is the ability to invest as little as $50 in the share market. Other online brokers usually have a minimum investment of $500 or $1000 which can be a deterrent to those new to investing.

Any investment made through CommSec Pocket will only cost $2 brokerage per buy or sell transaction. Brokerage for amounts over $1,000 carry a 0.20% fee.

At first glance a $2 brokerage fee per transaction seems a good deal, especially when considering that trades under $1,000 with a traditional online broker cost around $10 per transaction.

However, when doing the calculations, $1,000 invested as $50 increments will end up costing $40.

If you were to wait until you could invest as $250 increments, then you’d only pay $8 for a total $1,000 investment which is a much better deal.

Another thing to be aware of is that even though CommSec Pocket advises you can invest in the share market with amounts as low as $50, it’s not always the case.

At the time of writing this article the minimum investment amounts range from $47 to $106, dependent on the theme.

How To Invest With CommSec Pocket

The first thing you will need to do is register with CommSec online. You’ll need to have your tax file number and proof of identity documents when completing this process. It should only take about 10 minutes.

After you have set up a CommSec account you can then download and log into CommSec Pocket.

Once in the App, it’s time to explore the investments. Each investment will display information in the following format.

Aussie Top 200

Select explore to find out the details. Here you’ll find a brief description about the fund and how the money is invested, as well as the per unit price.

Scrolling down the screen, you’ll come across the top companies the ETF buys shares in. For the Aussie Top 200, only the top 10 companies out of 200 are listed on the App.

Further down is a very basic overview about the top four companies.

Industry coverage is the next item. This data shows the industries your money would be invested in as percentages. For example, it may be financial services, healthcare, industrials, real estate, energy or technology, amongst others.

If you keep scrolling, information about price and performance returns are displayed.

Then right down the bottom of the screen is a small menu displaying ‘More info about this ETF’. You should open this as it contains the MER, aka the fees charged on the investment, by the ETF.

Once you have the funds saved and have decided on the ETF ‘theme’, select INVEST.

The first screen to open is a warning about paying your debts and having some cash set aside for emergencies before investing. CommSec Pocket also advises that you should understand the risks involved with investing in ETFs.

After you have okayed the warning screen (which opens with every single investment trade), you’ll be asked for how much money you would like to invest. Your available balance will also be shown and how much the minimum investment will cost.

At this stage you can set up a regular investment plan for fortnightly or monthly intervals for a specific amount of money. Or you can leave your investment as a one off.

It really is that easy!

Summary

This App seems suitable for those new to the share market, especially if they’d like to dip their toe into the stock exchange with amounts of money as small as $50.

Brokerage is only $2 per buy or sell transaction, yet be aware that $2 each time can quickly add up into an amount that costs more than using a traditional online broker with a higher minimum purchase requirement.

Dependant on the person, having seven ETF funds to choose from could be good or bad. However, always check out the management costs (MER) to find out if you are getting a good deal or not.

If we use the Barefoot Investor’s criterion for MER, only four of the CommSec Pocket ETFs make the cut, reducing the amount of choice.

Only basic information is provided about each ETF, again, this could be good or bad and is not necessarily a negative for the new investor as it avoids feeling overwhelmed and confused.

Overall, the CommSec Pocket App seems a good match for beginner investors as long as they are aware of the cost of brokerage on small repeated investments and that they are informed about how the MER affects their money.

This App could help a beginner become sustainable with their finances.

Disclaimer: I am not a personal finance adviser. Do your own research and contact a professional as needed. Tread your own path.

*Edit: After emailing CommSec I have since found out this product is not suitable for investing on behalf of a minor (child). Investing through CommSec Pocket can only be done in the name of the individual.

Please comment below on which online broker you use and why you’ve chosen them.

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