How to Buy Shares in New Zealand (NZ) – Beginner Guide 2020

Are you based in New Zealand and looking to buy shares online? If so, there are heaps of share dealing platforms that accept NZ residents – most of which are regulated by tier-one bodies such as the FCA and ASIC.

This allows you to find an online broker that best meets your needs. Once you do, you simply need to open an account, deposit some funds, and the choose which shares you want to buy.

In this guide, we explain everything you need to know to get your hands on shares in the easiest, safest, and most cost-effective way. On top of discussing the best New Zealand stock brokers to consider, we also give you a handy step-by-step walkthrough so that you can get started today!

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Learn the Basics of Buying Shares in NZ

In a time not so long ago, buying shares in New Zealand was a somewhat cumbersome task. This is because you would need to open an account with a traditional stock broker, and subsequently discuss your share dealing requirements with them over the phone.

Not only was this a time-consuming process, but the manual demands of using a conventional stock broker would result in hefty fees. Fast forward to 2020 and it is now possible to buy shares in New Zealand from the comfort of your home.

But before you buy shares, you need to learn about how the market works and find how to find the right stock broker. Let’s take a look at everything you need to know before you buy shares online.

What are Shares?

When a company decides to take things to the next level, it will make the transition to a PLC. In doing so, it will hold what is known as an ‘Initial Public Offering’ – or IPO. This allows the company to raise outside capital – which is often in the billions of dollars.

For example, when Uber went public in 2019, it raised $8.1 billion. In return, those that invested in the company received shares. When you purchase shares, this means that you own a ‘share’ of the company. This means that you own a small percentage of the firm – proportionate to the amount you invest.

In turn, you will be entitled to dividends. The shares will then go up and down in value – with prices dictated by market forces. In other words, the value of shares are based on supply and demand. That is to say, as more people buy the shares, the price will increase. If there are more sellers than buyers, the opposite will happen.

What Shares Can you Buy in New Zealand?

When it comes to tradable markets, this will ultimately depend on the type of stock broker that you decide to sign up with. For example, the likes of eToro and IG give you access to stock markets of all shapes and sizes. Whether its shares listed in the UK, US, Canada, or Japan – these platforms have you covered. With that said, you need to check what stock exchanges your chosen broker hosts before opening an account.

How do you Make Money From Shares?

The overarching purpose of buying shares is to grow your money. This can actually come in two forms – capital gains and dividend payments.

Capital Gains

Capital gains refer to the profit you make when the value of the shares go up. For example:

  • Let’s suppose that you buy 100 shares in Nike at $80 per stock
  • This means that your total investment amounts to $8,000
  • Four years later, Nike shares are now priced at $120 per stock
  • You are happy with your gains so you decide to sell the shares
  • You made $40 per share ($120-$80), and at 100 shares – this amounts to a profit of $4,000

This $4,000 is what is known as capital gains. In New Zealand, you will need to pay tax on these gains – with the rate sitting between 10.5% and 28%.

Dividends

On top of capital gains, you can also make money through dividend payments. This is where the company decides to share some of its profits with stockholders. Not all companies pay dividends, as some decide to focus on capital gains instead – or they simply haven’t been in business long enough to do so. If the company in question does pay dividends, this is usually paid quarterly or bi-annually.

If you’re still somewhat confused about dividends, check out the example below:

  • Let’s say that you hold 200 shares in IBM
  • The firm pays dividends four times per year
  • This time around, IBM announces a dividend yield of 6%
  • This amounts to $7.62 per share
  • You hold 200 shares, so you will receive a total of $154.40 ($7.62 x 200 shares)

As you can see from the above, you made a tidy yield of 6% just from your dividends. When you add in the possibility of an increased share price, you might end up making even more.

How to Buy Shares – Step by Step Guide 2020

If you have read our guide up to this point, you should now have a firm understanding of how stocks and shares work, so know you need to learn how to actually buy them. This step-by-step walkthrough below is based on our top-rated broker eToro, although you are free to go with any platform of your choosing.

Open an Account with eToro Today – Pay 0% Commission on Stocks


First and foremost, head over to the eToro website and click on the ‘OPEN ACCOUNT’ button. You’ll find it at the top-right hand of the page. You will then need to enter some personal information.

This includes your:

  • Full Name
  • Home Address
  • Date of Birth
  • New Zealand Tax Number
  • Contact Details

You will also need to choose a username and a strong password.

Upload Some ID

eToro – and all regulated stock brokers for that matter, are required to identify each and every trader that registers an account. The process takes just a few minutes, and simply requires to upload a copy of your:

  • New Zealand passport or driver’s license
  • Recently issued bank account statement or utility bill

eToro should be able to validate the documents straight away.

Deposit Funds

You will need to meet a minimum deposit amount of USD $200 at eToro (about NZD $300).

Supported payment methods include:

  • Debit Cards
  • Credit Cards
  • Paypal
  • Skrill
  • Neteller
  • NZ Bank Transfer

Once your deposit has been processed – which is instant unless you are using a New Zealand bank account, the funds will be converted to USD. This comes at a small fee of 0.5%. Then, you can buy shares from multiple stock exchanges at the click of a button without needing to worry about exchange rates.

Buy Shares

As soon as you have funded your eToro account, you can buy shares straight away. The platform lists more than 800 companies across several exchanges, so click on the ‘TRADE MARKETS’ button to have a browse.

Alternatively, if you already know which shares you want to buy, you can enter the name of the company in the search box at the top of the page. Once you have found the company you wish to invest in, click on the ‘TRADE’ button.

Then, you will see an order box pop up. This is where you need to enter the amount that you want to invest. By default, this is set as a dollar value – so if you want to buy $500 worth of shares, enter this into the box. If you want to base your investment on the number of shares, you can do this clicking on the ‘UNITS’ button.

Finally, click on the ‘OPEN TRADE’ button. And that’s it – you’ve just bought shares from the comfort of your home!

What to Consider Before Buying Shares in New Zealand

Before taking the plunge, there is a range of considerations that you need to make. This is to ensure that you do not go into the online stocks and shares space without the required know-how. With this in mind, below you will find some handy tips that will ensure you get your online share dealing endeavours off on the right foot!

Tip 1: Diversification is Key

Without a doubt, it is crucial that you attempt to diversify as much as you can. This will allow you to mitigate the risks of putting all of your eggs in one basket. For example, let’s suppose that you have $2,000 to invest. An inexperienced investor might decide to inject the entire $2,000 into a single company.

If that company subsequently runs into financial difficulties, the investor is likely to encounter major losses. At the other end of the spectrum, a shrewd investor would instead back 20 different companies at $100 each. Not only this, but they would select companies from several different sectors.

This might include retail, banking, apparel, food and beverage, oil, real estate and more! Some investors will go one step further by investing in a stock ETF that contains dozens, if not hundreds of different firms.

Tip 2: Start With Small Amounts

If you have little to no experience of the stock markets, it’s wise to start with smaller amounts. Sure, while one of the best ways to improve your knowledge is to actually put your own capital at risk – you should still tread diligently.

As you become more and more comfortable with how shares work, you can then think about increasing your stakes. This is why it is important to assess your chosen broker’s minimum deposit amount.

Tip 3: Consider Copy Trading

Another angle to consider when starting out for the first time is that of a Copy Trading portfolio. As we briefly mentioned earlier, this is where you will be copying the trades of other investors. For example, eToro allows you to research the investor’s credentials by looking at their historical trading results.

You can also check to see the types of shares they typically buy, and what risk rating they have been assigned. When you have found a trader that you like the look of, you can elect to copy their entire portfolio.

Then, any buy and sell orders that they place will be mirrored on your account. Ultimately, not only does Copy Trading allow you to invest in a passive manner, but you will learn how experienced traders operate.

Example of a Popular eToro Copy Trader: Jian Swang

Although there are hundreds of investors to copy at eToro, we thought it might be a good idea to highlight one of its leading traders – Jian Swang. The trader joined eToro in January 2019 and hit the ground running from day one. Over the course of the year, the investor generated returns of 22.18%. But, even more impressively, Jian has also taken 2020 by the horns.

As you can see from the screenshot above, the trader is already 51.67% up for the year. Furthermore, you can see that he protected his balance at the peak of the Coronavirus pandemic in March and April, and then re-entered the market in late May. This resulted in gains of 14.22% and 13.96% in June and July, respectively.

Example of How Copy Trading Works

It can take some time to get your head around the Copy Trading feature at eToro, so check out the example below.

  • Let’s say that you decide to back Jian Swang
  • To keep things simple, we’ll say that Jian has 10% of his portfolio in Apple shares and 20% in Amazon shares. The rest is made up of other companies.
  • You decide to copy the trader with an investment of $1,000
  • As such, your portfolio will consist of $100 of Apple shares (10%), $200 of Amazon shares (20%), and the remaining $700 (70%) in other shares.

As you can see from the above, your portfolio mirrors the trader like-for-like at an amount proportionate to what you invested. Moving forward, you can elect to copy all future trades. This means that every time the trader buys and sells new shares, your portfolio will be updated accordingly.

Tip 4: Understand What you are Paying

We can’t stress enough how important it is for you to understand exactly what your chosen broker will be charging you to trade. Stock broker fees come in a range of shapes and sizes, such as:

  • Share Dealing Fee: This is a fee that you will pay every time you trade. It will either come as a flat fee or a percentage of the amount you trade. Either way, it will be charged when you buy shares, and again when you sell them. Brokers like eToro do not charge any share dealing fees at all.
  • Annual Fees: Otherwise referred to as a maintenance fee – some New Zealand brokers will charge you an annual fee. This is usually charged as a percentage of your account balance. For example, if the broker charges 0.5%, and you have $10,000 invested at the platform, your annual fee will amount to $50.
  • Spread: The spread is the difference between the ‘bid’ and ‘ask’ price. The difference between the two prices is indirectly paid to the broker. As such, the wider the spread, the more you will pay.
  • Non-Trading Fees: Don’t forget about non-trading fees. This could be anything from deposit/withdrawal fees, inactivity fees, or currency conversion fees.

To give you an idea of how much you are likely to pay when buying shares online in New Zealand, check out the comparison fee table below.

NZ Stock Broker Fees
Charge Per Trade Annual Fee Conversion Fee
eToro Free Free 0.50%
Plus500 0% Commission Free 0.50%
IG From 0.5% $50 AUD per quarter (less than 3 trades) 0.50%

 

Tip 5: Learn Fundamental Research

Finally, it is important for you to learn the ins and outs of fundamental research. We are not talking about anything elaborate here – simply a firm grasp of how real-world news can impact your investments.

  • For example, let’s say that you hold shares in BP. If Saudi Arabia and Iran have a disagreement – and subsequently decide to maximize production output, this will result in a drop in global oil prices.
  • In turn, the value of your BP shares is likely to go down.
  • At the other end of the spectrum, if OPEC agrees to cut back on production levels, the price of oil is likely to go up – and your BP shares might follow suit.

It should be noted that performing fundamental research on a day-to-day basis can be challenging from a time-resource perspective. This is especially the case if you have a large basket of shares in your portfolio. The good news is that there are heaps of third-party platforms that do the hard work for you.

For example, Yahoo Finance allows you to enter the stocks that you are invested in, and in turn, you will receive an alert when a relevant news story develops. This ensures that you are kept abreast of any updates that could negatively impact the value of your investment.

With that being said, seasoned investors will take things to the next level. By this, we mean that they will perform independent research on a company before investing their hard-earned money. There are dozens of financial ratios that you can perform yourself, which ultimately – will ensure that you are not overly-reliant on third-party opinions.

This includes:

P/E Ratio

One of the most trusted stock market calculations performed by savvy investors is that of the price-to-earnings (P/E) ratio. Put simply, the ratio allows us to assess whether a stock is potentially under or overvalued. If it turns out to be the former, this means that you stand to buy the stock at a price lower than its ‘intrinsic value’.

So, what you need to do is divide the company’s stock price into its earnings per share. This will then leave you with a ratio. You then need to look at what the average P/E is for the specific market or sector that the stock operates in.

For example:

  • Let’s say that you get a P/E ratio of 7.5
  • The stock in question operates in the retail industry and is listed on the NYSE
  • The average P/E for the sector is 11.2
  • This means that the P/E ratio is telling us that the stock could be undervalued

Debt-to-Equity Ratio

The P/E ratio alone isn’t enough to warrant a stock investment. As such, it is also worth looking at the debt-to-equity ratio. As the name implies, this looks at the relationship between the amount of debt held by a company in relation to its equity.

In other words, the ratio will let us know whether or not the company has too much debt. If it does, then this could be a major red flag. So, what you need to do is add up all of the firm’s debt from its balance sheet, and then divide the number into its total shareholder equity.

In doing so, you will be left with a number between 0 and 1. Put simply, the closer the number is to 1, the higher its debt levels. In an ideal world, you will be picking a stock with a below-average P/E ratio and a low debt-to-equity ratio!

How to Pick a New Zealand Stock Broker

If you want to buy shares in New Zeland, you will need to use an online share dealing platform. In its most basic form, this will give you access to leading stock markets like the London Stock Exchange, New York Stock Exchange, and the NASDAQ. With dozens of NZ stock brokers now active in the online space, you need to spend some time finding a platform that meets your personal requirements.

This should include key metrics such as:

Regulation

The most important metric that you need to look out for when choosing a New Zealand share dealing site is that of regulation. In particular, you should be looking for brokers that are regulated by tier-one licensing bodies. This includes the likes of the FCA (UK), ASIC (Australia), and CySEC (Cyprus).

Crucially, this will ensure that you are able to buy and sell shares in a safe environment. For example, your investment funds will be held in segregated bank accounts, and all traders at the platform must provide a form of ID. All in all, if your chosen broker is not regulated – avoid it.

Payments

You then need to think about the payment method that you plan to use when you buy shares online. After all, you will be risking your own capital. In the vast majority of cases, regulated NZ share dealing sites allow you to use a local debit or credit card. This can be issued by Visa, MasterCard, and sometimes Maestro.

Alternatively, it might worth considering an e-wallet like Paypal or Skrill. In doing so, you will benefit from instant, free, and secure payments. The other option at your disposal is to transfer funds from your New Zealand bank account – albeit, it can take a few days for the money to arrive.

Stock Markets

You then need to look at the types of shares that the broker gives you access to. For example, most NZ brokers will allow you to buy shares from the major US exchanges of the NASDAQ and New York Stock Exchange, as well as the London Stock Exchange, While some brokers stop there, others will give you access to heaps of other markets. This might include shares listed in Australia, Canada, Japan, Germany, France, and even Suadi Arabia!

Customer Support

You should also look at customer support, not least because there might come a time where you need assistance on your account. The easiest way to make contact with an NZ broker is via live chat. The best share dealing sites also offer a telephone service. Email is also an option, but expect to wait 0-2 working days before you get a response.

Where to Buy Shares – Best New Zealand Share Dealing Platforms of 2020 – Our Picks

Don’t have time to research a broker yourself? If so, below you will find our list of the best New Zeland share dealing platforms of 2020. Each broker is licensed by one or more regulatory body, easily allows you to deposit and withdraw funds with an NZ debit/credit card, and gives you access to lots of international stock exchanges.

1. eToro – Best All-Round New Zealand Stock Broker

eToro is an online brokerage platform that offers a range of asset classes. On top of traditional stocks and shares, you can also trade cryptocurrencies, ETFs, indices, commodities, and more. If it’s purely stocks that you are interested in, the broker gives you access to more than 800 publicly-listed companies.

This includes the bread and butter of the New York Stock Exchange, NASDAQ, and London Stock Exchange – as well as smaller markets. This includes stocks listed in Canada, Australia, Germany, and France. Irrespective of what stock exchange you decide to target, eToro allows you to buy shares without paying a single cent in commission. What we also like about eToro is its CopyTrader feature.

This allows you to copy the portfolio and ongoing trades of other users. As such, you can buy and sell shares without needing to lift a finger. In terms of the specifics, eToro allows traders in New Zeland to open an account in minutes. You can easily deposit funds with an NZ debit/credit card, bank account, or e-wallet. You will, however, need to meet a USD $200 minimum deposit – which is just over NZD $300.

Take note, all deposits at the broker will be instantly converted to USD at a rate of 0.5%. This is to ensure you have unfettered access to the broker’s entire asset range without being burdened with ever-changing exchange rates. Finally, it is also important to note that eToro is heavily regulated – so your funds remain safe at all times. This includes licenses with the FCA , ASIC, and CySEC.

Pros:

  • Super user-friendly online stock broker
  • Buy stocks without paying any commission or share dealing charges
  • 800+ stocks listed on multiple international markets
  • Deposit funds with a debit/credit card, e-wallet, or NZ bank account
  • Ability to copy the trades of other users

Cons:

  • Not suitable for advanced traders that like to perform technical analysis

75% of retail investors lose money trading CFDs at this site

2. Plus500 – Commission-Free CFD Provider

The second option that is worth considering is that of Plus500. The platform specializes in CFDs, meaning that you will not be buying or selling shares in the traditional sense. On the contrary, you will trade instruments CFDs – meaning that you will not own the underlying asset.

This does come with its advantages – such as being able to trade stock CFDs with leverage. In the case of Plus500, you will be offered leverage limits of 1:300 – meaning a $500 account balance will allow you to trade with up to $150,000. In the case of dividends, if you have an outstanding buy position this will be reflected in your account. If you have a sell position, there will be a negative adjustment.

Similarly, stock CFDs at Plus500 allow you to short-sell companies. For example, if you think that the value of IBM shares will go down, the platform allows you to speculate on this. If stock CFD trading is what you are after, Plus500 lists more than 2,000 companies from several international markets. You can quickly open an account from the comfort of your home, and minimum deposits start at just £100 (about NZD $200).

Plus500 accepts multiple NZ payment methods, including debit/credit cards, bank accounts, and Paypal. Finally – and much like eToro, Plus500 is heavily regulated and its parent company is listed on the London Stock Exchange. Below you will find details of its regulatory position:

Plus500AU Pty Ltd (ACN 153301681), licensed by: ASIC in Australia, AFSL 417727, FMA in New Zealand, FSP 486026; Authorised Financial Services Provider in South Africa, FSP 47546.

Pros:

  • Commission-free CFD provider – only pay the spread
  • Thousands of financial instruments across heaps of markets
  • Ability to trade stock CFDs with leverage of up to 1:300
  • Takes just minutes to open an account and deposit funds

Cons:

  • CFDs only
  • More suitable for experienced traders

80.5% of retail CFD accounts lose money, your capital is at risk

3. IG – Trusted New Zealand Share Dealing Platform With Competitive-Fees

IG is one of the most established share dealing platforms in the online brokerage space. Not only does it offer traditional shares and stock CFDs, but you will also have access to a fully-fledged spread betting facility. If it’s conventional shares that you want to buy, IG allows you to do this from just £8 (about NZD $15) per trade.

If you buy or sell more than three trades in a single month, this goes down to just £3 (about NZD $5.50). This makes IG hugely competitive in the fee department – especially when you factor in its tight spreads. In terms of tradable markets, IG lists more than 10,000 companies.

Not only does include major exchanges in the UK, US, and Japan – but heaps of less liquid markets. Crucially, this allows you to mitigate your long-term risks by investing in hundreds of different companies. If you like the sound of IG, minimum deposits start at £250 (about NZD $490). The broker supports NZ debit/credit cards and bank accounts.

Pros:

  • Trusted broker with a long-standing reputation
  • Good value share dealing services
  • Leverage and short-selling also available
  • Spread betting and CFD products
  • Access to dozens of international markets
  • Great research department

Cons:

  • Minimum deposit of £250 (NZD $490)
  • US stocks have a $15 minimum commission

Other New Zealand Stock Brokers to Consider

While the above three New Zealand stock brokers currently lead the way in the share dealing space, there are many others consider.

This includes:

  • Interactive Brokers NZ: Launched way back in 1978, Interactive Brokers is one of the most established share dealing sites in the space. Regulated by reputable licensing bodies like the SEC (US) and FCA, you should have no concerns regarding safety. Although you will have a highly comprehensive list of shares to choose from, pricing is on the high side.
  • Macquarie Group Limited: If you are looking for a managed investment service, Hobson Wealth can point you in the right direction. The platform provides access to New Zealand and international shares, ETFs, and more.
  • Jarden: Jarden in an NZ-based institution that offers direct brokerage and wealth management services. You will have the capacity to invest in New Zealand and Australian shares, bonds, and even IPOs.
  • Forsyth Barr Share Boker: This particular broker offers personalised share dealing guidance. This is because it has a Qualifying Financial Entity (QFE) status by the Financial Markets Authority (FMA).
  • Somerset Smith Partners: Founded in 1934, Somerset Smith Partners is a wealth management provider that also offers brokerage services. As such, you will access to domestic and international equities, as well as financial advice – should you want it.

What are the Pros and Cons of Investing in Shares?

Pros

  • Grow your money over the course of time
  • Increase the value of your investment when the shares go up in value
  • Earn passive income in the form of dividends
  • Mitigate your risks by creating a diversified portfolio of shares
  • Lots of New Zealand share dealing platforms are heavily regulated
  • Some online stock brokers allow you to buy shares commission-free
  • Easily deposit funds with an NZ debit/credit card, e-wallet, or bank account

Cons

  • You could lose money
  • You will need to select your own investments
  • No guarantee that your shares will increase in value

How to Buy Shares NZ – The Verdict

In summary, buying shares in New Zealand has never been easier. Once you have opened an NZ stock broker account and deposited funds with a debit/credit card or bank account – you will then have access to thousands of companies. With that said, you still need to do a bit of homework on the broker you sign up with, as well as the types of shares you decide to buy. Ultimately, just make sure you understand the risks of investing in the stock markets – as past performance is never indicative of future results.

Looking to get started right now? If so, it might be worth considering eToro. You’ll be able to open an account in minutes, instantly deposit funds with an NZ debit/credit card, and then buy shares on a commission-free basis!

eToro – Buy Shares With Zero Commission

Disclaimer: Investing in shares involves significant risk of loss and is not suitable for all investors. You should carefully consider your investment objectives, level of experience, and risk appetite before making a decision to buy shares. Most importantly, do not invest money you cannot afford to lose.

FAQs

What stocks markets can you invest in from New Zealand?

If you're based in New Zealand you will have access to dozens of stock exchanges at the click of a button. Once you have signed up with a suitable broker, you will likely be able to buy shares from companies based in the US, UK, Canada, Japan, Australia, and more!

Is it safe to buy shares online?

Yes, as long as you are using an online broker that is regulated by a tier-one body - such as the FCA, ASIC, or CySEC, buying shares online is completely safe. The main risk that you need to consider is that of choosing companies that underperform on the markets.

What New Zealand payment methods can I use to buy shares online?

Most online stock brokers allow you to deposit and withdraw funds with a New Zealand debit/credit card or bank account, and sometimes an e-wallet like Paypal..

What fees will I pay when buying shares in New Zealand?

Fees can vary quite considerably in the online share dealing space. Most platforms charge a dealing charge, which you will pay every time you buy and sell shares. Some will also charge an annual maintenance fee. This is why we suggest using a low-fee broker like eToro, which allows you to buy shares without paying any dealing charges or annual fees.

What is the minimum number of shares that I can buy?

There is no longer a requirement to buy whole shares, as a number of new-age platforms support fractional ownership. With that said, there will still be a minimum trade size, which can vary from broker-to-broker.