If you’ve wanted to tap into big-name stocks like Amazon or Apple…but haven’t found a way to do it from New Zealand…I have fantastic news for you.
A brand-new digital finance platform called Hatch has just been released to the public.
It’s a new tool specifically for Kiwi investors who want to dabble in American stocks.
Here at Money Morning New Zealand, we’ve spent quite a bit of time researching ways for New Zealanders to access overseas opportunities without breaking the bank.
Unfortunately, up until now, that space has been drowning in complicated procedures and downright evil costs.
I’m talking $70 or more for a single trade.
That’s highway robbery.
And, frankly, it’s probably an unwise decision for most individual investors.
That’s why we’re so excited for Hatch.
It basically opens the doors to Wall Street…and the incredible opportunities that live there.
We’ll tell you all about it. But first — the RBNZ and the official cash rate (OCR).
The Reserve Bank of New Zealand (RBNZ) has been holding the OCR at 1.75% for nearly two years now…despite a growing and seemingly healthy economy. And they’ve just opted to keep it there…again.
Normally, you’d see central banks trying to raise rates once it looks like the market’s headed in the right direction.
In other words, the OCR is like steroids. Sometimes it can be helpful to use them, but only when things are really dire. They’re often used to treat arthritis or asthma.
But problems start when you use them as a healthy adult. You might become super-muscular and have incredible endurance. You might feel like a rock star.
But, over time, steroids can have destructive consequences for your body.
That makes sense, right? Because it’s essentially tampering with the natural chemical balance in your body.
Well, the official cash rate is similar. A low rate is the equivalent of taking steroids. If the market is hurting, it can do some good. But taking them when the market’s healthy is a recipe for disaster.
And that’s why we’re concerned. The RBNZ has kept rates at basement-bottom levels since April 2009. And, sure, the market appears to be growing at amazing rates…like a rock star…but we reckon that the continued dose of low rates is why that’s happened.
Eventually the rates will have to go up. And when they do, our drug-dependent junkie of a stock market could go into a nasty withdrawal.
Just food for thought…
Back to Hatch…
Kiwibank’s related entity, KiwiWealth, has just launched an amazing new service that allows individual investors to access US markets.
Investors have known for a long time that the US holds some of the fastest moving, most profitable stocks in the world — but inhibitive costs have kept us outside, looking in.
Some sophisticated investors have figured out ways to gain access, but it often involves opening US brokerage accounts under murky conditions…or trading from NZ at a tremendous cost per trade.
I mentioned $70 per trade for a NZ to US transaction. In the US, it’s normal to make trades for under $10.
At those kinds of costs, you’d naturally be conservative or limited in how you approach US opportunities. And that could end up costing you…
So Hatch has created an easy tool for Kiwi investors to do the following…
- Sign up and verify your identity.
- Deposit money through your NZ-based bank.
- And invest straight into US stocks.
It’s also cleared up some of the confusing elements of international trading, including foreign exchange and tax considerations.
Hatch will automatically sort both of those out for you…
So here’s what they charge for the service:
- US$3 per trade on a single share (or fraction of a share).
- Or 2 cents per share when you trade a bunch. So, as an example, if you buy 500 shares in IBM [NYSE:IBM], you’d pay US$10 for the lot. It’s a minimum of US$8 for these batch trades.
- 0.8% on the interbank exchange rate.
Tax Reporting Fees
- US$1.50 for your W-8BEN form (required for all foreigners investing in the US).
- US$0.50 to process your annual US tax return.
Note on taxes: You’ll still need to file here in NZ. It can be a bit confusing. Especially, the FIF regime. Tax advisers might be your best bet if you’re going to dabble in this space.
Frankly, based on our knowledge of market prices for each of these services, it appears that Hatch is giving investors a good deal.
I reckon they’re making it so affordable in order to entice more customers to try out other services in their KiwiWealth suite.
But, as it stands, you don’t need any previous affiliation with KiwiWealth or Kiwibank to sign up.
Since Hatch offers a relatively straightforward way for Kiwis to access these stocks now, we at Money Morning New Zealand will begin paying closer attention to opportunities in the US market to bring to you.
More on that soon…
For now, check out Hatch at their website — hatchinvest.co.nz
Let us know if you signed up…and what you think of it — [email protected]
Editor, Money Morning New Zealand
PS: As always, we want to remind you that we are an independent research firm. We aren’t associated with Hatch or KiwiWealth or Kiwibank. Nor do we get any commission through them. The advice above is for your benefit alone, dear reader.
Editor’s Note: Thanks to the eagle-eyed readers and the Hatch representative who let us know we had made an error. The 8% forex fee should have read ‘0.8% on the interbank exchange rate’. Our apologies.