What is Commsec Pocket?
Commsec Pocket is an online investing platform provided by Commsec. Commsec, also known as Commonwealth Securities is an online stock brokerage firm that is operated by the Commonwealth Bank of Australia. Let’s dive into this Commsec Pocket review and see if it’s worth your time and money investing in ETF’s through Commsec Pocket.
Commsec was founded in 1995 and actually founded Australia’s first online brokerage app for mobile phones (iPhone) in 2008. While Commsec was innovative years ago it’s fair to say that newer Fintech companies have caught or even overtaken them in regards to online brokerage platforms.
So in 2019 Commsec launched Commsec Pocket, which was their micro investing platform. So that Commsec kept some market share in the rapidly growing micro investing trend among investors.
Given they already had Commsec, which caters to investors with large lump sum investments ($500 plus). It was a clear move at targeting Millennial investors and those that probably hadn’t invested before.
Commsec Pocket allows investors to invest into a choice of 7 ETF’s with a minimum investment amount of $50. Which is significantly less than most other brokers allow as their minimum investment, often ranging from $100- $500 minimum investment.
It also enables investors to choose between one off investments or set up automated regular payments. As a result investors can automatically build their wealth through this strong feature.
How Does It Work?
The main investing function of Commsec Pocket is through ETF’s or Exchange Traded Funds. What on earth is that I hear you ask?
It can be viewed as a basket that contains multiple stocks within it. While the stocks within the basket are structured to track an index, sector, commodity or other asset.
An example of this is an ETF called, BetaShares NASDAQ 100 ETF (NDQ). The basket in this case is the ETF called NDQ, it tracks the NASDAQ 100 index (The top 100 US Tech Stocks). This basket contains companies like Apple (10%), Microsoft (9.6%), Amazon (8.4%), Tesla (4.1%) and Facebook (3.8%) among many others.
The companies within the ETF are proportioned according to how the NASDAQ 100 Index proportions them. Therefore ETF’s can be a great way to invest as they don’t require active management from professionals and are automatically rebalanced monthly to match their index.
ETF’s have gained massive popularity over the last few years. This is due to their passive investing style, low fee structure and high performance. So it was definitely a smart move from Commsec to launch Commsec Pocket for Millennial investors.
In order to use Commsec Pocket to invest you must have a CommonWealth Bank Transaction account or Commsec ID. You will need to fund your account and wait until the funds have settled before you can trade.
Once your account is funded you will need to choose an investment option (More on these below) and then select whether you are wanting to create a one off investment or make it a regular payment.
Automated investments are a great way to build your wealth over time. As you can probably tell from this Commsec Pocket review, I would strongly warn against using this platform without running the numbers first!
There are 7 ETF Investment options to choose from:
- Aussie Top 200 (IOZ: iShares Core S&P/ASX 200 ETF)
- Aussie Dividends (SYI: SPDR MSCI Australia Select High Dividend Yield Fund)
- Global 100 (IOO: iShares Global 100 ETF)
- Emerging Markets (IEM: iShares MSCI Emerging Markets ETF)
- Health Wise (IXJ: iShares Global Healthcare ETF)
- Sustainable Leaders (ETHI: BetaShares Global Sustainability Leaders ETF)
- Tech Savvy (NDQ: BetaShares NASDAQ 100 ETF)
As you can see these 7 options provide investors with a wide array of sectors to invest in. Furthermore each investment option will have its own strengths and weaknesses, but ultimately the best investment option is the one that matches your values best.
ETF’s will incur a small management fee as the platform that provides them still needs to make money and get paid for rebalancing the ETF monthly. Therefore the ETF’s within the Commsec Pocket platform have management fees and they range from 0.09% to 0.67%.
Fortunately these aren’t out of pocket expenses, meaning you won’t be charged more fees in your account, rather it is ‘baked’ into the price, being deducted from the unit price of the ETF.
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This is usually the deciding factor when selecting an investment platform as fees can really add up over time and deteriorate your gains. Fees are an important factor to consider in this Commsec pocket review and how they stack up against other platforms.
Commsec Pocket charges investors fees only when they trade, whether that is buying or selling. They do not charge investors any ongoing or inactivity fees which is better than some other platforms on the market.
A good point to note here though, is you can’t have a Commsec Pocket account without having a CommBank Account. There are a few monthly requirements, such as being under 25 or depositing over $2,000pm into this account for the fee to be waived. Otherwise it will cost you between $4-$6pm to have the bank account.
You will get charged $2 every time you trade with Commsec Pocket under $1,000. If you trade (Buy or Sell) more than $1,000 you will be charged at 0.20% of the trade value. While $2 may not seem like a large fee it is pretty significant when you consider some platforms offer free trades.
Fees in Perspective
To put the $2 fee into perspective, if you were to invest the minimum amount of $50 per trade (which is highly likely given this platform targets Millennials looking to Microinvest) then your fee comes to a ludicrous 4%!
Don’t forget, this is just to buy your initial investment, you will also get charged $2 when you sell your investment too. So if you sold your investments and they hadn’t increased you would have actually lost 8% of your money.
This means if you are using the app for what it was intended for (micro investing) then you would need your investments to increase 8% just to break even after fees.
For those trying to work out if that’s a lot, the historical annual rate of return for the S&P 500 (commonly referred to as ‘the market’) is 10%. Only 2% higher than your fees, it just doesn’t really seem worth it.
Obviously if you want to invest more money it drops the relative percentage in your fees charged, but I would argue if that’s the case you probably shouldn’t be using Commsec Pocket anyway.
As someone wanting to help educate people about the power of investing and taking control of their finances I rate investing apps that include educational content on their platforms.
Fortunately it is now becoming more common for investing platforms to provide educational content to their investors. Moreover, it may even become a requirement in the future to ensure speculators don’t get swept up in Gamestop Mania 2.0 without understanding what they are doing.
Commsec Pocket has educational content on their platform, and while the content itself is very informative it certainly seems very ‘Banky”. To put it simply, I am not excited by the educational content they provide, especially when I compare it to Spaceship Voyager’s Educational content.
Pros and Cons of Commsec Pocket
- Ability to already invest with your current bank if a CBA customer already
- A nice variety of investment options to choose from
- Simple investing with access to ETF’s
- No inactivity fees for the brokerage
- Need to join CBA bank to invest with this platform
- CBA has monthly bank fees that add up if you don’t meet their monthly criteria
- Only able to invest in ETF’s, no functionality to invest in individual shares
- Crazy HIGH Fees!!!
- Unfriendly user experience
- Poor Customer Support
Should You Invest With Commsec Pocket?
Investing has the potential to grow your wealth exponentially over time. Some key secrets to building your wealth through investing are time, consistently investing and low fees.
Investing through Commsec Pocket will absolutely destroy your wealth building process due to the high fees charged via the platform.
It has a really unfriendly user interface and uninspiring customer experience. I struggle to see who would benefit from using Commsec Pocket.
The target audience is Millennial investors either starting out on their investing journey or investing with small sums of money. There are better micro investing platforms out there on the market for this target market.
As you can tell from this Commsec Pocket review I would strongly urge you to stay away from using the platform and reconsider if you are already using it.
Alternatives to Commsec Pocket?
Both of these platforms allow you to start investing with as little as $5 and the fees are significantly lower, or fee free depending on the platform. Subsequently this really plays a big difference in your wealth building journey through investing.
If you can save up a little bit more and invest $100 at a time then my favourite Investing Platform is Superhero. It allows you to invest in both ETF’s and individual Australian stocks. Buying and selling ETF’s is completely free compared to buying or selling Commsec pocket ETF’s. They do have a $5 fee for buying/selling individual stocks though.