Cheapest Online Brokerages to Invest in US Stocks/ETFs - IBKR vs Syfe Trade vs Moomoo & More

Free commissions? No currency conversion fees?

Sounds great when you’re looking out for the cheapest brokerage to invest with.

But when you dig a little deeper, you’ll realise that these brokerages can actually cost you more!

How? The answer lies in the Forex (FX) spread.

Read on to find out how much it really costs to dollar cost average into US stocks/ETFs with IBKR, Syfe Trade, Moomoo, and Tiger Brokers!

Disclaimer: We are not sponsored by any of the platforms listed. Platforms are chosen based on popularity among the Seedly community and based on writer’s discretion.

TL;DR: Cheapest Brokerage to Dollar Cost Average for US ETFs/Stocks — CMC Invest vs IBKR vs Syfe Trade vs Webull vs Moomoo vs Tiger Brokers

To calculate who is actually the cheapest, we will be assuming that S$1,000 is fully invested monthly for 12 months.

We’ll be using a derived spot rate of 0.74756425, assuming IBKR charges roughly 20 basis points and 5 basis points from an interbank dealer.

*Taken within minutes of each other to ensure consistency on 4 August 2023.

Do note that our calculations are assuming that the exchange rates and exchange rate differences are consistent! You can replicate the same table by opening all your applications and comparing the FX rates when you are trading.

Jump to:

• Understanding How Brokers Make Money
• Forex (FX) Rates Comparison
• Cheapest Online Broker to DCA S$1,000 per month into US Stock/ETF
• When Is It Cheaper to Invest with IBKR, CMC Invest, Syfe Trade, Webull, Moomoo, or Tiger Brokers?

Disclaimer: Information is accurate as of 4 August 2023. 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 investment products.

Understanding How Brokers Make Money

Before we go into the actual costs, let’s find out how brokers make money from investors like us.

Brokers earn revenue from various fees such as commission, platform, and/or currency conversion fees. In this article, let’s use the three of the most popular online brokerages in Singapore; Interactive Brokers (IBKR), Moomoo, and Tiger Brokers:

Syfe Trade, Moomoo, Webull, CMC Invest, and Tiger all offer free currency conversions, unlike IBKR, with a minimum US$2 fee.

Why bother with the supposedly more expensive IBKR, right?

However, what these brokers don’t tell you upfront is that their FX spreads are higher (worse) than IBKR.

In other words, they give you a less favourable currency conversion rate than IBKR and take their profits from there.

Only CMC Invest is fully transparent with this and states that they charge a flat 0.60% FX settlement fee, which is included in our calculations.

Forex (FX) Rates

In layman’s terms, the FX rate is how much US dollars I will get for my Singapore dollars.

Based on the table above, I would get lesser USD if I exchange the same amount of SGD if I did it with Tiger Brokers than if I did with IBKR.

This can be referred to as the cost incurred due to the higher FX spread.

But of course, we would have to factor in the IBKR currency conversion fee of US$2.

This means that Syfe Trade, Moomoo, and Tiger Brokers would be cheaper for small amounts. However, there comes a tipping point as we invest more where IBKR becomes cheaper. But more on this later.

Cheapest Brokerage to DCA S$1,000 per month into US Stock/ETF

For simplicity’s sake, let’s take a S$12,000 dollar cost averaging strategy over 12 months. Thus, we would be investing S$1,000 every month.

Here’s the total cost over 12 months:

Do note that the figures are rounded to the nearest appropriate decimal places.

From our calculations, CMC Invest comes up on top as the cheapest brokerage to DCA into a US ETF or stock.

But if you have more money (above S$7,842.46) to invest, IBKR would then overtake CMC Invest to become the cheapest brokerage.

This is all thanks to their better FX spread.

If you were to convert the S$12,000 all at one go, IBKR will become EVEN cheaper as you would only need to pay the US$2 fee once.

When Is It Cheaper to Invest with IBKR, CMC Invest, Syfe Trade, Webull, Moomoo, or Tiger Brokers?

As mentioned previously, for small amounts, it would be cheaper to invest with CMC Invest. But, past a certain amount, the savings you get from IBKR’s lower FX spread offsets the extra US$2 you pay for currency conversion.

So let’s do the math to find out:

Still a little confused about the tipping points? Here’s an example:

Investing less than S$7,842.46 per trade? CMC Invest is cheaper.

Investing more than S$7,842.46 per trade? IBKR is cheaper.

Conclusion

All in all, when investing in US stocks or any other overseas stocks, you must consider not just the fees associated with the broker you are using but also the FX spread if you want to truly minimise your costs.

Moreover, don’t just take costs into account, as you should also consider how easy their investment sites/apps are to use, the ability to buy fractional shares, and the variety of markets they have access to.

Most importantly, read reviews (click on the names to view!) to see what other users have to say about these online brokerages:

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