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HOW TO BUY SHARES IN NEW ZEALAND (NZ) – BEGINNER GUIDE 2022

Kane Pepi
Updated: March 12, 2024 | 10:17 am
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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.

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!


HOW TO BUY SHARES NOW? 5 QUICK STEPS

 1. Choose a 0% commission New Zealand stock broker
 2. Fund your account with a bank card, Paypal or instant bank transfer (min
    deposit USD 200).
 3. Select a company stock and open a position by clicking ‘Buy’.
 4. To trade the share as a CFD, specify your Stop Loss, Leverage (2x or more),
    Take Profit and open your trading position.

To learn more, read all the content on this page, and check out our guide to the
best shares.


WHERE TO BUY SHARES – BEST NEW ZEALAND SHARE DEALING PLATFORMS OF 2022 – 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 2022. 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. PLUS500 – TRADE SHARE CFDS WITH TIGHT SPREADS



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 1:5. 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, 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 1:5
 * Takes just minutes to open an account and deposit funds

Cons:

 * CFDs only
 * More suitable for experienced traders

Visit Plus500 Now

CFD Service. Your capital is at risk


2. 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

Visit IG Now


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 2022 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 is 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 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 goes 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.


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 43 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.
 * 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 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!


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 is 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.


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.


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.

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.


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.

KANE PEPI



KANE PEPI

Kane Pepi is a British researcher and writer that specializes in finance,
financial crime, and blockchain technology. Now based in Malta, Kane writes for
a number of platforms in the online domain. In particular, Kane is skilled at
explaining complex financial subjects in a user-friendly manner. Academically,
Kane holds a Bachelor’s Degree in Finance, a Master’s Degree in Financial Crime,
and he is currently engaged in a Doctorate Degree researching the money
laundering threats of the blockchain economy. Kane is also behind peer-reviewed
publications - which includes an in-depth study into the relationship between
money laundering and UK bookmakers. You will also find Kane’s material at
websites such as MoneyCheck, the Motley Fool, InsideBitcoins, Blockonomi,
Learnbonds, and the Malta Association of Compliance Officers.
View all posts by Kane Pepi


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