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Investing is important to build our wealth. While we cannot predict how the market performs, and the returns we will earn, we can minimise something else that chips away at our returns – the fees we pay when investing in stocks.
Paying more in fees inevitably eats into our potential returns. Over an extended period, higher fees can siphon out a hefty chunk of our long-term returns, especially since we could have invested and earned returns on it.
At the end of the day, we cannot run away from paying some types of fees when we invest. What we can do is make sure we understand the fees we are paying, and, as far as possible, keep them to a minimum.
Read Also: How Much Can Commission Fees Affect Your Returns If You Invest A Small Amount Regularly?
6 Types Of Fees You Have To Pay When Investing In Stocks
#1 Brokerage Commission Fees
Traditionally, brokerage commission fees have been the biggest cost when we invest in stocks.
Whenever we buy or sell a stock, our brokerage will charge us a commission fee to execute the trade. Typically, commission fees in Singapore range from 0.08% to 0.28% of our trade value. In general, the higher the value of our trade, the lower the percentage we pay. Many brokerages also set a minimum brokerage commission fee of about $8 to $25.
By choosing an online brokerage, such as Tiger Brokers, investors can enjoy more competitive brokerage commissions. For example, investors who trade Singapore stocks through Tiger Brokers pay a commission fee of just 0.03%, with a minimum commission of $0.99 per trade. If we invest in U.S. stocks, we are charged US$0.005 per share, with a minimum of US$0.99 and capped at 0.5% of the trade value.
| Markets | Brokerage Commission charged by Tiger Brokers |
| U.S. stocks & ETFs | USD0.005 / Share Min. US$0.99 / Order Max. 0.5% * Trade Value / Order |
| Hong Kong stocks | 0.03% * Trade Value Min. HKD 7 / Order |
| Singapore stocks, ETFs & REITs | 0.03% * Trade Value Min. SGD 1 / Order |
| China A-Shares | 0.03% * Trade Value Min. CNH 8 / Order |
| Australia | 0.03% * Trade Value Min. AUD 2 / Order |
Source: Tiger Brokers
Fortunately for Singapore investors, Tiger Brokers offers zero commission* when we invest in U.S. stocks when we refer a friend to open a Tiger Brokers account.
Moreover, all new investors with Tiger Brokers also enjoy zero commissions for 1 year when we invest in Singapore, Hong Kong and China A-shares, and 180 days for U.S. stocks.
*Terms and Conditions apply. Please refer to https://ift.tt/6v5jEXO for other applicable fees.
#2 Platform Fees
Many online brokerage firms, such as Tiger Brokers, also charge a small platform fee. We can view this as a fee for using the brokerage’s online platform – that will go to maintaining and improving the platform for investors.
| Markets | Platform Fees |
| U.S. | USD 0.005 / Share – Min. USD 1 / Order – Max. 0.5% * Trade Value / Order |
| Hong Kong | 0.03% * Trade Value – Min. HKD 8 / Order |
| Singapore | 0.03% * Trade Value – Min. SGD 1 / Order |
| China A-shares | 0.03% * Trade Value – Min. CNH 8 / Order |
| Australia | 0.07% * Trade Value – Min. AUD 1 / Order |
Source: Tiger Brokers
#3 Regulatory Fees
In addition to fees charged by our stock brokerages, we also incur some fees levied by regulatory bodies. Such fees will also vary across the different stock markets.
For example, if we are investing in Singapore stocks, we will incur a Trading Fee of 0.0075% of our trade value and a Clearing Fee of 0.0325% of our trade value. While this fee is collected by Tiger Brokers, it is charged by the Singapore Exchange (SGX).
For investors buying U.S.-listed stocks, we will incur a Settlement Fee. An additional SEC Membership Fee and Trading Activity Fee is applicable for sell trades. Other markets will levy their own regulatory fees.
Regardless of the markets we invest in, Singapore investors will also incur a GST of 8% on certain fees we pay.
#4 Custodian Fees
In Singapore, we can store our SGX-listed investments in our Central Depository (CDP) account.
We can also store local and overseas stocks with our brokers. This is one reason we enjoy favourable commission fees, as we will have to use the same brokerage firm when selling our investment, creating stickiness to the brokerage platform.
For investors who hold SGX counters with Tiger Brokers, Tiger Brokers hold these stocks in segregated custodian accounts. SGX charges a custody fee of $2.16 (inclusive of 8% GST) per quarter on these custodian accounts – which Tiger Brokers simply passes on to investors. These fees will be charged on the 4th business day of the next quarter.
Source: Tiger Brokers
Currently, Tiger Brokers is waiving the quarterly custody charges for investors who regularly trade SGX stocks, i.e. at least once per quarter.
#5 Deposit or Withdrawal Fees (and Currency Conversion Fees)
Majority of online brokerages practice upfront cash payments. As such, we need to deposit cash into our brokerage platform before we can start investing. Similarly, when we sell our stocks, the money remains in our brokerage platform, and we need to withdraw the funds back into our bank account.
Certain platforms may charge deposit and/or withdrawal fees. While Tiger Brokers does not charge such fees, deductions by our bank may occur if we are remitting or withdrawing funds from or to non-Singapore banks.
With global markets on offer within the Tiger Brokers app, we need to exchange our Singapore Dollars deposits to U.S. Dollars, Hong Kong Dollars or Australian Dollars before investing, and back to SGD again after divesting.
Similarly, Tiger Brokers does not charge any currency conversion fees. However, if we want to deposit or withdraw foreign currencies, we may incur a charge if we do not do it correctly. For deposits, we need to ensure that we are sending U.S. Dollars and also that we select Tiger Brokers U.S. Dollars account. For withdrawals, we can withdraw foreign currencies into our DBS/POSB account for free, while there will be a bank fee for non-DBS/POSB accounts.
#6 Investment Level Fees
Certain counters that we invest in have built-in costs. One example is ADRs, or American Depository Receipts. ADRs are typically overseas companies listed in the U.S. Companies such as Tiger Brokers’ parent, UP Fintech (NASDAQ: TIGR) is an ADR, while other popular ADRs include Taiwan Semiconductor Manufacturing Co (NYSE: TSM), Alibaba (NYSE: BABA), AstraZeneca (NASDAQ: AZN), Rio Tinto (NYSE: RIO), and many more.
Tiger Brokers advises that “ADR fees usually range from 1 to 5 cents per share”. Usually, ADR fees are deducted from dividends. If the ADR does not pay one, then it will be collected through an investor’s brokerage.
Other common types of investments that have in-built costs are ETFs and REITs for the management of the securities. These fees are never charged directly to investors, and instead, are taken from the cash flows of the underlying investments instead.
Enjoy Zero Commissions* When You Build A Diversified Portfolio
Prior to online brokerages coming into Singapore, one of the biggest pain points for local investors was the high commission fees we had to pay. There was also limited transparency in foreign currency exchange rates and fees when investing in overseas markets.
Since Tiger Brokers landed in Singapore in 2020, it has provided competitive commission costs, and also a very transparent depiction of all of its fees and charges on its website. The Tiger Brokers website also carries a comprehensive FAQs about our account-related charges to answer further questions that investors may have.
Going a step further, all new investors get a Welcome Bundle worth up to S$410 in rewards and perks. Such investors also enjoy zero commissions* for 1 year when investing in Singapore, Hong Kong and China, and for 180 days in the U.S market. They also receive zero commissions on 5 options trades, and get a 3-day 20% yield coupon on their funds.
On top of this, investors can also enjoy lifetime zero commissions for the U.S. market, receive rewards worth up to S$392 when we refer 1 friend to the platform from now till 30 August 2023. Our friend, as a new investor with Tiger Brokers, will also enjoy the full Welcome Bundle.
*Terms and Conditions apply. Please refer to https://ift.tt/6v5jEXO for other applicable fees.
Lower Commission Fees Just One Part Of The Equation
Paying a lower commission fee is just one part of the equation to earn better returns. The Tiger Brokers app offers a superior user experience with comprehensive free digital tools to help us become better investors.
This includes giving us up-to-date companies’ data and charts to analyse our investments, as well as the ability to keep track of our returns – taking all fees into consideration. New investors can also join free courses for beginners to learn more about investing in U.S. stocks and reading U.S. stocks financial statements.
On the Tiger Brokers app, we can also access a trove of high-quality content from like-minded investors and traders, as well as engage with a community of 2.5 million users. These include a curated line-up of market commentary and earnings call videos, breaking news and investment ideas from reputable publishers, as well as keep up with significant announcements via a calendar for companies’ results and economic data.
Besides stocks, we can also invest in funds via Tiger Brokers’ Fund Mall. What’s even better is that we can regularly invest a small sum each month – as little as S$100 – and pay zero fees* to start building our globally-diversified portfolio.
This can act as a good springboard for new investors to gain an understanding and confidence to buy stocks on their own.
*Terms and Conditions apply. Please refer to https://ift.tt/6v5jEXO for other applicable fees.
Read Also: Step-By-Step Guide To Opening An Account With Tiger Brokers Singapore
The post Guide To All The Fees You Pay When Investing In Stocks – And How To Reduce Them appeared first on DollarsAndSense.sg.
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