Welcome to our new series of reviews and discussions of all the trading platforms and share trading apps in Australia. In this article, we discuss Pearler and how it works.
It’s important to understand exactly what each platform or app does, so you can choose the best investment strategy for you.
- What is Pearler?
- How does Pearler work?
- How does Pearler’s pricing work?
- Is Pearler safe?
- Pearler and Stockspot compared
- Pearler and Robinhood compared
- Pearler and Superhero compared
- Pearler and Stake compared
- Pearler and SelfWealth compared
What is Pearler?
Pearler encourages long-term investing rather than short term trading, and to that end, there are features such as auto-deposit and auto-invest, which we explain below. Despite the focus on long-term investing, you’re still able to sell your investments on the platform. Pearler also includes community elements in their platform, allowing investors to compare and share their portfolios with other investors and ‘finfluencers.’
How does Pearler work?
Pearler has launched an app where users can sign up and invest using the app. Once you’ve signed up to the platform, you’ll need to set up your target portfolio by adding the investments you want in your portfolio. Once you’ve selected your investments, you manually adjust the percentage of each one to achieve the investment mix you want.
To select the right investments, you’ll need to search individual ASX codes, or can use the “Popular ETFs” section. You can also search the portfolios of other members on the platform. It should be noted that copying another person’s portfolio comes with its own set of risks and may not suit your personal goals or objectives
You may need to do research or get advice to make sure your portfolio is set up correctly, and you’ll also need to determine how much to allocate to different investments. Pearler doesn’t provide any personal advice on which ETFs to select or how to manage your portfolio.
How does Pearler’s pricing work?
Pearler has a transaction based model, which means the more you trade, the more fees you pay. When buying or selling shares in a single transaction, a brokerage fee of $6.50 is charged. For US shares, Pearler charges a 0.5% AUD flat fee per FX conversion between AUD and USD.
What are Pearler’s auto-deposit and auto-invest features?
Pearler’s auto-deposit feature allows direct debit from your bank account into your Pearler CTA account.
The auto-invest feature allows you to choose whether you want to make regular deposits which will be invested as soon as they come into your account, or you can choose to make regular deposits that get invested when the pooled deposits in your Pearler CTA account hit a certain amount.
Is auto investing the same as automatic rebalancing?
No. Stockspot’s automatic rebalancing ensures your portfolio remains balanced and consistent with your investment goals and time horizon. Pearler’s auto investing feature simply invests according to a set of rules and doesn’t consider your investment goals, risk appetite and time horizon.
Is Pearler safe?
Pearler is an Australian trading platform regulated by ASIC. However, it’s important to consider that when it comes to the ownership of your shares, Pearler offers a combination of approaches. While they provide direct ownership, the Holder Identification Number (HIN) for investing in Australian shares, they also utilise custodial arrangements for US shares and their micro investing option. Custodians such as Sandhurst Trustees Limited and Phillip Capital Limited hold license for these services, leading to a combined approach and potentially reducing your individual ownership.
Stockspot believes a direct ownership model is better for investors, Stockspot clients own their investments under their individual HIN. While it can cost a little more, investors aren’t exposed to counter-party risk of the custodian. If something ever happened to Stockspot or one of the external suppliers we work with, it wouldn’t impact your investments because those investments are owned by you and you can simply take them with you. Find out why direct ownership of your investments is important. Find out why direct ownership of your investments is important.
Pearler and Stockspot compared
Stockspot is an online investment adviser, Pearler is a trading platform. Like Pearler, Stockspot is a strong advocate of long-term investing, but every individual has different goals and timeframes, and that’s why we create customised strategies and portfolios.
Pearler users can construct a portfolio of shares, ETFs, and LICs, but they don’t provide personalised advice and you need to pick all your investments yourself, and you need to select the investment strategy you want. To help you get started, there are some generic portfolio templates you can follow, or you can view the portfolios of other people on the platform. Be aware that following someone else’s strategy may not suit your individual circumstances.
When you invest with Pearler, you’ll need to buy defensive assets in yourself, and you’ll also have to determine the correct percentages of these portfolio so you’re always hitting your target growth rate.
With Stockspot, once you settle on your investment strategy, you get a properly diversified portfolio of ETFs (including ETFs that include Australian shares, global shares, emerging markets and defensive assets like bonds and gold). Stockspot reviews the investment on an ongoing basis and will rebalance your portfolio when necessary. If you want to personalise your recommended portfolio, you can do this once your portfolio hits a certain amount, via Stockspot Themes. You don’t need to keep on top of your investments because we do it for you – but clients can talk to an adviser about their investments whenever they like.
Additionally, Stockspot has a 9 year track record of returns. You can see how the Stockspot portfolios have performed here.
Pearler and Robinhood compared
Pearler promotes itself as a long-term investing platform, Pearler makes money from brokerage fees. Robinhood is a trading app that’s only available in the U.S. They market ‘free trades’ but make most of their money from selling order flow and receiving compensation for directing orders to different parties for executing a trade. Robinhood also earns money from margin lending which means an investor can borrow money from Robinhood to buy stocks.
Pearler and Superhero compared
Pearler offers Australian shares, US shares, ETFs and LICs, and offers $6.50 brokerage.
Superhero offers trading of Australian shares with brokerage starting at $5. They’ve also recently started offering brokerage-free US shares and ETFs, but you’ll be charged a foreign exchange fee of US$0.70 for every AUD$100 transferred.
Unlike Pearler, Superhero doesn’t have a direct ownership model, and instead, your investments are held on an omnibus account with others.
Read more about Superhero.
Pearler and Stake compared
Pearler offers Australian shares, US. shares, ETFs and LICs, and offers $6.50 brokerage.
Stake gives Australian investors exposure to both Australian shares and US shares. Stake charges AUD$3 brokerage for all trades up to $30,000 or 0.01% for trades above $30,000. For US share, Stake charges USD$3 brokerage for all trades up to $30,000 or 0.01% for trades above $30,000.
When you use Stake you can purchase fractional shares, whereas you can’t do this with Pearler.
Both Pearler and Stake’s Australian shares are directly in your name on your own individual HIN.
Pearler and SelfWealth compared
Pearler and SelfWealth are both Australian platforms that allow you to trade shares.
SelfWealth offers trading of Australian shares and US shares shares with brokerage starting at $9.50. Pearler charges a 0.5% platfee per FX conversion between AUD and USD for US share. Your investments are held directly in your name on your own individual HIN, the same as Pearler.
One of the differences between the Pearler and SelfWealth is Pearler’s auto-invest option.