Speed Shopping with Sharesies
My 16 hour work week is spread over four days and Monday is my “BIG” day where I work 9am through to 2.30pm with a half hour break for lunch which I take at around 11.30am. I always zip home for this as it only takes me a couple of minutes to get there (you hearing this Aucklander’s?). So, by about 11.35 I can be in my kitchen scoffing food and then I take a few minutes to clear my emails.
This particular Monday there was one there from Sharesies
Where did this money come from I hear you ask? I have a weekly direct debit of $5 to my Sharesies account. Teeny I know but I set it up when I blogged about it and it just keeps ticking away and I forget about it, UNTIL I receive this reminder email that is.
“No time like the present” I thought so I jumped on and invested $5 (the money I would have spent if I bought my lunch downtown by the way).
JOB DONE in 30 seconds, then a quick yarn with Jonny and I headed back to work (where when my colleague asked how my lunch break was I said that not only was the toast I ate DELICIOUS but I also found the time to invest in the New Zealand Property Sector. I thought she might be wowed by my impressive use of time but I think her answer was “yeah, whatever, pass me the stapler please…”)
Then at 6.37pm that same day I received another email:
WOW, THAT WAS QUICK!
And I didn’t think too much more of it until I received this email from Ben, a fellow Happy Saver:
I hope you're having a great week?
I've been comparing SmartShares, SuperLife and Sharesies -- not so much to find the lowest fees, but to work out which has the smoothest/easiest system and which one allows me to purchase shares in the fastest time.
I find it a little frustrating (cos I like seeing stuff happen quickly!) that when we put money through to SmartShares, it can take a while to be processed. E.g. if we want to make a lump sum payment today (22nd of the month), it won't go through until the end of next month. It looks like, if we start investing in the US 500 ETF through Sharesies, our transactions would go through faster than with SmartShares. Is that correct? I was reading your blog about Sharesies and it sounds like your share purchase happened within a matter of days. But doesn't Sharesies buy into SmartShares? So why/how is it faster to buy SmartShares through Sharesies than through SS? I hope you can understand my question.
Thanks so much for your time and wisdom :)
Well, no worries at all Ben, always happy to help! This is an EXCELLENT QUESTION that I know a number of us struggle with so I’m happy to explain how it works.
I flicked Ben’s question through to Sharesies and here is what they had to say:
"Smartshares products are traded on the NZ Stock Exchange and are available to be bought and sold at any time when the market is open. Sharesies has decided to do this every day". Hope this helps! Have a lovely weekend :)
If I buy through Sharesies I am buying ON MARKET. Sharesies takes my $5 and adds it to all of the other lump sums other investors have made that day and they go and bulk buy units of SmartShares (note that you can now buy into other funds too). They place an order a day at about 12.30pm so as long as I’ve placed my order before then I’ll get my units. Once they have them they divvy them up into our accounts. It’s the fastest way of buying.
Sharesies (and SuperLife) buy on the open market where buyers and sellers all jostle together to buy and sell to each other (supply and demand) which means that the price WILL be slightly different to buying direct with SmartShares. If I had a broker they might charge me to go out and buy these shares for me. Sharesies on the other hand does charge me a small monthly fee (currently I’m paying $1.50) but gives me the benefit of being able to buy SmartShares units on the market but without the normal higher brokerage costs.
If our share market plunged tomorrow and all the shares dropped dramatically in price (went on sale) and I wanted to buy up and place a big order, as long as I had been organised ahead of time and had put money into my Sharesies wallet then I could scoop up a deal; with Sharesies I could take advantage of the price TODAY (as long as I placed my order by lunchtime). Not so with SmartShares.
SmartShares pumps out brand spanking new units on a monthly basis and this is what I’m buying when I buy directly with them each month. If I buy these there are no transaction fees or brokerage fees meaning the units are created at their actual true asset value.
They are like the car factory creating brand new cars that Sharesies then goes onto buy second hand at a later date.
Personally I buy the bulk of my units directly with SmartShares themselves, instead of with SuperLife or Sharesies (here is the reason I went for them in the first instance) with an ongoing direct debit which is taken from my bank account on the 20th of each month. When the SmartShares machine pumps out shiny new SmartShares at the end of each month these are allocated to me and a couple of days into the new month I receive an email showing me how many units my dollars have purchased. So there is a lag time of about two weeks. But, it is set and forget and I don’t have to lift a finger. I like this.
I started to dabble in Sharesies just so I could blog about it and as a result a new habit has formed - at this stage with just a fiver a week. The direct debit from my bank account is automatic BUT I still have to physically go into my account to buy. If I miss the notification email or just plain old forget then I miss an opportunity to purchase. I asked them about this awhile back; why don’t they just automate it? They said, maybe in time, they are pretty responsive to customer needs, but it’s not a feature yet.
I like how I can purchase at lunchtime and have an email by dinner time and theoretically I could hold off buying until I felt the price was ‘right’. BUT I’m not trying to time the market and pick ‘the right’ time to buy because how the heck would I know when that time is and when the market highs and lows are? We can only see these with hindsight and for newbie investors timing the market is a fools game. So, I’m content with my dollar cost averaging with SmartShares, that is, to buy steadily and consistently through thick and thin over a long period of time. My SmartShares is set and forget for me now but with my Sharesies I get to enjoy the wee buzz of physically pushing “Buy” and purchasing shares whenever I feel like it and I can see those shares in my own name pretty quickly.
My Mum once told me that gardening teaches patience”. Well, I think that I will tell my daughter “investing teaches patience”. Sharesies is awesome, you are buying into funds and you can do it QUICKLY, but don’t be in a rush to do everything right now. Whichever of the three you choose to go with: Sharesies, SuperLife or SmartShares just START and don’t stop. Week in week out, month in month out, year in year out. Just invest.
I hope that answers your question well enough Ben?