The biggest and most popular companies in the world are listed in the US. It’s no surprise that the US market tends to feel more vibrant when compared to the Singapore stock market.
Just think of names like Apple, Amazon, Microsoft, Meta (Facebook), Alphabet (Google), Tesla, Visa, and NVIDIA, as well as Walt Disney, Pfizer, Shopify, Zoom, Roku, SalesForce, Palantir, and of course, many more. The market capitalisation of all stocks listed in the US is over US$40 trillion, four times more than the next biggest stock exchange – China at around US$12 trillion. Singapore’s market capitalisation of slightly above $600 billion.
Looking at investment returns, the US market is commonly referred to as the market returns. Over the long term, the S&P 500 Index has delivered robust returns as well. It has returned 9.4% p.a. in the past 5 years, and 12.6% in the past 10 years. In contrast, Singapore’s Straits Times Index (STI) has returned 3.0% and 3.9% in the last 5-year and 10-year periods.
Finally, living in Singapore, our homes, jobs, savings and CPF balances and other investments are naturally exposed to the Singapore economy. From a diversification perspective, it makes sense to consider a global exposure.
Things To Consider When Investing In US Stocks And ETFs
When we invest in US stocks, our stocks will be held in a custodian account with our stock brokerage. Apart from brokerage fees, we should also pay attention to the relevant custodian account charges, especially for dividend handling fees and corporate actions fees. Other custodian account charges include recurring fees for holding counters as well.
We should also note that the US market typically opens from 9.30 am to 4 pm Eastern Time (ET). This is between 9.30 pm and 4 am in Singapore. In certain months, when daylight savings is in effect, the US market opens between 10.30 pm and 5 am for us in Singapore. Paying attention to the markets during the wee hours of the night may not be feasible for many Singapore investors. We may not be able to sleep when the markets are still actively moving while we’re in bed.
Another characteristic of investing in US stocks is that we get to invest in just one share (compared to 100 shares if we invest in Singapore-listed companies). This can help us manage our positions better. Of course, individual stocks in the US can also cost more – for example, each Microsoft stock costs more than US$335, while each Tesla stock costs nearly US$256. The good news is that certain brokerages in Singapore, such as Interactive Brokers, Tiger Brokers, Syfe Trade and Webull are now offering fractional trading – enabling us to invest in fractions of a share, which will cost a much smaller amount.
Finally, we also need to pay a 30% withholding tax if we are receiving a dividend from the US-listed companies that we are investing in. There are also estate taxes we may have to be concerned about. For Singapore-listed investments, we typically do not need to pay any withholding taxes and there is no estate tax in Singapore.
Read Also: Complete Guide To Investing In Fractional Shares In Singapore
Brokerage Account Fees For Buying US-Listed Stocks And ETFs
Almost all local brokerages in Singapore currently offer access to US-listed stocks. Hence, a main consideration is the brokerage fees that we will be charged. That’s why we should look at the low-cost brokerages, and then decide between using one of them.
While we may have existing brokerage relationships with the other brokers for our Singapore stock portfolio, it may not make sense to use them when buying our US-listed stocks and ETFs. This is because some of us may prefer keeping our Singapore-listed stocks in CDP rather than a custodian account. It may also be that custodian charges for Singapore stocks are different to US stocks.
Below are the brokerages that have a minimum commission fee of under $10, without any further restrictions. We should then also pay attention to the custodian fees.
| Stock Brokerages | Trading Fees | Minimum Commission Fees (US$) | Custodian Fees |
| FSMOne | 0.08% | US$8.80 | |
| Interactive Brokers (IBKR) | US$0.005/ share | US$1 (Max commission of 1.0% of trade value) | – |
| No transaction fees for ETFs* | $0 | ||
| moomoo | -Zero commission -Platform fee of US$0.99/order |
Platform fee of US$0.99/order | – |
| ProsperUs (by CGS CIMB) | Flat fee of US$5 | US$5 | – |
| SAXO Capital Markets | 0.06% | US$4 (Max commission of US$100) | Custody Fee: 0.06% |
| Syfe Trade | Flat fee of US$1.49/trade (2 free trades each month) | US$1.49 | – |
| TD Ameritrade | Zero commission | $0 | |
| Tiger Brokers | -US$0.005/ share -Platform fee of US$0.005/ share |
-US$0.99 (Max commission of 0.5% of trade value) -Platform fee of US$1 (Max commission of 0.5% of trade value) |
– |
| Usmart | -US$0.003 / share -Platform fee of US$0.005/ share |
-US$0.50 (Max commission of 0.5% of trade value) -Platform fee of US$1 (Max commission of 0.5% of trade value) |
|
| Webull | Zero commission | $0 |
* IBKR’s commission-free ETFs include over 90 ETFs, and investors must hold the ETFs of at least 30 days.
Do note that we did not include any overseas brokerages that are not regulated by the Monetary Authority of Singapore (MAS) in the comparison. There are adequate low-cost brokerages options that are regulated by MAS.
Read Also: Singapore Online Stock Brokerage Account Fees Comparison (2021 Edition)
This article was originally published on 12 April 2021 and updated with new information.
The post Buying US Stocks In Singapore: Guide To Stock Trading Platforms And Brokerage Fees (2023) appeared first on DollarsAndSense.sg.
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