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Best Brokerages for Investing in US Stocks – How to Buy US Stocks

Best Brokerages for Investing in US Stocks - How to Buy US Stocks

profileSudhan P

Do you wish to invest in U.S. stocks but don’t know how to?

Have you heard about how U.S. stocks can offer higher growth potential than Singapore-listed ones?

If you would like to invest in the U.S. market, let us break down the nuances in this one-stop guide to investing in U.S. shares!

Source: Giphy

TL;DR: Best Brokerages for Investing in US Stocks – How to Buy US Stocks

 


Before we look at buying U.S. stocks, let’s explore the following topics (click to jump):

Note that the information is accurate as of 9 March 2023. Prices and promotions are subject to change without prior notice.

Disclaimer: The information provided by Seedly serves as an educational piece and is not intended to be personalised investment advice. ​Readers should always do their own due diligence and consider their financial goals before investing in any stock. The writer owns shares in Starbucks. 


Why U.S. Stocks?

Just imagine the vast geographical reach companies in the U.S. have against companies in Singapore. 

A quick Google search shows Singapore’s landmass is 721.5 km² while that of the US is 9.834 million km². 

As for population size, Singapore has 5.6 million people while the U.S. has roughly 60 times more people at 334.5 million, the third most populous country globally, behind China and India. 

Those statistics show just how much growth companies in the U.S. have. 

A company starting out in a small area in the U.S. can expand into various cities in the state and then to multiple states in the country. There’s just so much growth before the company is “forced” to expand overseas. 

In comparison, a Singapore company can probably expand from one town to another and hit saturation point quickly in our country. 

And of course, most of us know that the U.S. is still the world’s largest economy with big names such as Meta (Facebook), Tesla, Coca-Cola, Apple, Amazon and so on.

As a case in point, let’s explore the stocks of four different food and beverage companies — two from Singapore and two from the U.S. 

Those companies are Old Chang Kee (SGX: 5ML), Jumbo Group (SGX: 42R), Chipotle Mexican Grill (NYSE: CMG) and Starbucks (NASDAQ: SBUX). 

Over the past five years, the U.S.-originated companies of Chipotle and Starbucks have grown tremendously compared to the local companies of Old Chang Kee and Jumbo. 

Although there are many differences between the companies that drive stock returns, with the vast difference in performance, we can safely attribute geographical reach to be one key difference. 

Source: Yahoo! Finance

Having said that, U.S. stocks do not fit all investor profiles. 

If you are looking for income, Singapore stocks could be the better choice. 

We are not taxed on dividends here compared to buying U.S. dividend stocks (more on taxes later). 

There are also other risks involved with investing in U.S. stocks such as currency risk, which investors should be aware of.  

What Are the Different Indices Available?

As a Singapore investor, you might be familiar with our local stock market benchmark, the Straits Times Index (STI)

Similarly, in the U.S., there are three major indices, and they are the: 

The S&P 500 index, as the name might suggest, includes 500 of the top US companies in leading industries. 

The Dow Jones Industrial Average is a stock market index tracking 30 large companies listed on two major U.S. stock exchanges of New York Stock Exchange (NYSE) and the Nasdaq.

The Nasdaq Composite Index consists of over 2,500 companies listed on the Nasdaq stock exchange. Many of those companies are involved in the technology sector. 

What Time Does the US Market Open and Close?

The NYSE and the Nasdaq have the same market hours. 

They open at 9.30am Eastern Time (ET) and close at 4pm ET from Monday to Friday. 

In local time, it’s from 9.30pm or 10.30pm till 4am or 5am (depending on daylight savings). 

The exception is during stock market holidays, of course. 

Trading can occur outside of normal stock market hours as well. 

There is “pre-market” trading, which can be as early as 4 am ET and “after-hours” sessions, which typically span from 4 pm to 8 pm ET. 

But do note that trading outside of the normal hours means you have to deal with less liquidity, wider spreads, more competition from institutional investors, and higher volatility. 

So, to keep things simple, retail investors should focus on buying and selling shares during normal stock market hours. 

Do I Have to Buy 100 Shares at a Time In the US Too?

For U.S.-listed stocks, we can just buy 1 share. 

This is unlike Singapore stocks, where we have to buy 100 shares at a go. 

The low barrier to U.S. shares also allows us to position and size our portfolio better. 

And manage our risk exposure to a particular stock better. 

Let’s say you are just starting out and have a S$5,000 portfolio.

If you were to buy 1 share of Facebook (NASDAQ: FB), you would spend around US$346 or S$472, without commission. 

That equates to 9 per cent of the portfolio. 

However, if you were to invest in DBS Group (SGX: D05) at a share price of S$33.69 per share, you would need to fork out S$3,369, excluding fees, to buy 1 lot or 100 shares of the bank.  

The outlay translates to 67% of your portfolio size.

Therefore, we may end up exposing our portfolio to higher risk than we would like. 

Best Brokerages for Investing in US Stocks

To buy U.S. shares, you must open a brokerage account that allows access to the U.S. market.

To choose the best brokers (on top of low commissions), Seedly’s online brokerage review platform is the place to go!

Over there, you can sort according to “Most Popular”, “Most Reviewed”, and “Highest Rating”.

Once you have chosen the broker for you, you can simply head over to the broker’s site to start opening an account.

The brokerages can be generally broken down into traditional Singapore brokers and overseas brokers. 

Let’s look at each category here (for online trades only).

Singapore Brokers

BrokerageMin. Fees/Trade (US$)Trading Commissions/TradeCustodian Fees
Cash Funded Trading Accounts
Syfe TradeIntroductory Offer: Unlimited free trades for the first three months

After three months
2 free trades / month,
US$1.49 / trade thereafter
FlatNo inactivity, withdrawal or platform fees
SAXO Markets4.00 (Bronze)
to
1.00 (Diamond)
0.06% (Classic)
to
0.02% (Diamond)
0.12% p.a. (Bronze)
to
0.06% p.a. (Diamond)
(custodian fee calculated daily using the end of day values and charged on a monthly basis)
OCBC Online Equities15.00 (Upfront payment)
to
20.00 (Post-trade settlement)
0.12% (Upfront payment)
to
0.15% (Post-trade settlement)
SGD 2 per counter per
month (subject to
prevailing GST if applicable)
Invoiced quarterly in arrears up to a maximum
of SGD 200 per quarter (or a maximum of SGD
67 per month)
(subject to prevailing GST if applicable)

Custody fee will be waived:
1. For the month if you execute at least 2
trades in that month.
2. For the quarter if you execute at least 6
trades in that quarter.
3. If the foreign security is delisted at the
point when we are computing the fees
ProsperUs
(by CGS-CIMB)
5.00FlatNo custodian fee
Phillip Securities
(POEMS Cash Plus)
3.88
(SG$0 - S$29,999 asset value)

2.88
(SG$30,000 - S$249,999 asset value)

1.88
(>S$250,000 asset value)
FlatWaived until 31 Dec 2023

Charges thereafter:
S$2 + GST per counter/month
(capped at S$150/quarter)
or
Waived with minimum 2 trades done per month or
6 trades per quarter or
minimum S$132 brokerage
per quarter for the
Account
FSMOne8.800.08%No custodian fee
Maybank Kim Eng Securities
(Prefunded)
10.000.12%S$2 + GST per counter/month (capped at S$150/quarter)

Custody Fee Waiver:
At least 2 Trades per month or
6 trades per quarter
Standard Chartered10.00 + GST
(Personal Banking Clients)
0.00
(Priority Banking Clients)
0.25%
(Personal Banking Clients)
0.20%
(Priority Banking Clients)
No custodian fee
DBS Vickers
(Cash Upfront)
18.00
(Cash upfront rates applicable to Buy trades and Multi-currency Accounts only)
0.15%S$2 + GST per counter/month (capped at S$150/quarter)

Custody Fee Waiver:
At least 2 Trades per month or
6 trades per quarter
CGS-CIMB Securities iTrade
(Cash Upfront Trading)
18.000.18%S$2 + GST per counter/month (capped at S$150/quarter)

Custody Fee Waiver:
At least 2 Trades per month or
6 trades per quarter(end Mar, Jun
Sep, Dec)
Duration of a suspended Counter
UOB Kay Hian
(UTRADE Edge)
13.000.12%
None stated for US equities
Basic Trading Accounts
CGS-CIMB Securities20.000.30%S$2 + GST per counter/month (capped at S$150/quarter)
HSBC Securities Trading10.800.15% + GSTNo custodian fee
KGI Securities20.000.30%None stated
Lim & Tan Securities20.000.30%S$2 + GST per counter/month (capped at S$150/quarter) +
GST
or
0.0025% pa of market value of shares whichever is applicable

Custody Fee Waiver:
At least 2 Trades per month or
6 trades per quarter
Maybank Kim Eng Securities20.000.30%S$2 + GST per counter/month (capped at S$150/quarter)

Custody Fee Waiver:
At least 2 Trades per month or
6 trades per quarter
OCBC Securities (Basic Trading Account)20.000.30%S$2 + GST per counter/month (capped at S$150/quarter)

Custody Fee Waiver:
At least 2 Trades per month or
6 trades per quarter
Phillip Securities (Cash Management)20.000.30%Waiver condition is 2 trades per month or 6 trades per quarter or minimum SGD132 brokerage per quarter. Otherwise. SGD2.00 per counter per month (subject to max SGD150.00 per quarter) subjected to prevailing GST is chargeable.
UOB Kay Hian20.000.30%S$2 + GST per counter/month (capped at S$150/quarter)

Custody Fee Waiver:
At least 2 Trades per month or
6 trades per quarter
DBS Vickers25.000.18%S$2 + GST per counter/month (capped at S$150/quarter)

Custody Fee Waiver:
At least 2 Trades per month or
6 trades per quarter

(Note: Custodian fees are waived if certain conditions are met. Typically, the fees will be waived if you trade at least two times per account per month or at least six times per account per quarter.)

For this category, Syfe Trade is the cheapest option. It also offers fractional trading that allows investors to buy into the world’s biggest companies starting with as little as US$1, regardless of the share price.

You can own a portfolio of stocks or ETFs for a fraction of the usual cost. Pretty cool, right?

However, do note that Syfe Trade is a custodian account, unlike many other traditional brokers on this list which are CDP accounts. You can learn more about the differences in this article.

Overseas Brokers

BrokerageMinimum Fees (US$)Trading CommissionsAdditional Notes
Firstrade0.00Flat US$25 per withdrawal
Interactive Brokers
(Tiered Account)
0.35 (base tier)US$0.0035/share, up to a maximum of 1% of trade valueN/A
(Inactivity fee removed as of 1 July 2021)
Moomoo
(Powered by Futu)
0.99
[Commission fee (0.00) + platform fee (0.99)]
Flat US$0 platform fee till 12 Apr 2023 for existing clients, and US$0 platform fee for one year after account opening for new clients, US$0.99 thereafter
TD Ameritrade0.00Flat US$25 per withdrawal
Tiger Brokers

Apply Now
1.99
[Commission fee (0.99) + platform fee (1.00)]
US$0.010/share
[Commission fee (0.0050) + platform fee (0.0050)], up to a maximum of 1% of trade value
Refer a friend to get lifetime commission free trades.
uSmart1.50
[Commission fee (0.50) + platform fee (1.00)]
US$0.008/share
[Commission fee (0.0030) + platform fee (0.0050)], up to a maximum of 1% of trade value
N/A
Webull

Apply Now
0.00FlatN/A

On top of brokerage and custodian fees involved, investors will need to take note of other fees such as Securities and Exchange Commission (SEC) fees and dividend handling charges (if any).

(Note: Firstrade is not regulated by the Monetary Authority of Singapore (MAS). We have added it here to provide a comprehensive comparison for readers. We would recommend investors trade through MAS-regulated brokers only.)

As for the overseas brokerages, I would look at TD Ameritrade because you can’t beat free. But note the hefty US$25 (S$33.80) withdrawal fee.

Otherwise, your next best option would be the Interactive Brokers Singapore’s tiered account with its low fees of US$0.0035 per share (min. US$0.35) and one free withdrawal every month (S$15 per withdrawal thereafter).

The best part? You can buy fractional shares on Interactive Brokers as well!

For those who want to have an in-depth comparison between Interactive Brokers (tiered account), Moomoo, and Tiger Brokers, here’s something for you.

Pro tip: Don’t be fooled by cheaper commissions as brokers also earn money from you via FX spread! Read more about it here:

Are There Taxes Involved?

Yes, there are taxes involved when investing in U.S. shares as a Singaporean. 

Investors need to take note of withholding tax for dividends, currency conversion fees, and U.S. estate tax. 

How to Research US Stocks?

Researching U.S. stocks to buy is made easy with stock screeners

StocksCafe, Investing.com, MSN Money and Yahoo Finance provide screening of US-listed stocks. 

From there, you can understand more about the companies by analysing their economic moats and financial statements, among other criteria

Forex Risks

Unless you’re retiring in a country that uses the U.S. dollar, there are also forex risks that should be taken into consideration. If you’re curious to know what other Seedly members have to say, check out this thread to get a better idea.


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About Sudhan P
It isn't fair competition when only one company in the world makes Monopoly. But I love investing in monopolies. Before joining the Seedly hood, I had the chance to co-author a Singapore-themed investment book – "Invest Lah! The Average Joe's Guide To Investing" – and work at The Motley Fool Singapore as an analyst.
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