A Singaporean Guide to Buying US Stocks With the Cheapest Brokerages
Do you wish to invest in US stocks but don’t know how to?
Have you been hearing how US stocks can offer higher growth potential than Singapore-listed ones?
If you would like to invest in the US market, let us break down the nuances for you in a simple manner….
… in this one-stop guide to investing in US shares.
TL;DR: The Definitive Guide to Investing in US Shares From Singapore
Before we look at buying shares using the cheapest brokerages available, let’s explore the following topics:
- The US offers larger exposure in terms of growth than many local stocks. However, there are risks to note too.
- There are different US indices such as the S&P 500 index, the Dow Jones Industrial Average, and the Nasdaq Composite Index.
- The US stock market trading hours are from 9.30 am Eastern Time (ET) to 4 pm ET from Monday to Friday (in local time, it’s from 9.30 pm or 10.30 pm till 4 am or 5 am depending on daylight savings).
- In the US, we can buy one share, unlike in Singapore, and that helps in position sizing.
- There are additional things to note, such as dividend withholding tax.
- To help us choose the best US shares, we can make use of stock screeners.
Why US Stocks?
Just imagine the vast geographical reach companies in the US have against companies in Singapore.
A quick Google search shows Singapore’s land mass is 721.5 km² while that of the US is 9.834 million km².
As for population, Singapore had 5.7 million people as of end-June 2019, while the US had 58 times more people at 328.2 million during the same time frame.
The US is the third most populous country in the world, behind China and India.
Those statistics show just how much growth companies in the US have.
A company starting out in a small area in the US can expand into various cities of 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.
Expansion overseas brings about its own set of risks.
As a case in point, let’s explore the stocks of four different food and beverage companies — two from Singapore and two from the US.
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 US-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.
Having said that, US 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 US dividend stocks (more on taxes later).
There are also other risks involved with investing in US stocks such as currency risk, which investors should be aware of.
What Are the Different Indices Available?
Similarly, in the US, 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 US’ 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 9.30 am Eastern Time (ET) and close at 4 pm ET from Monday to Friday.
In local time, it’s from 9.30 pm or 10.30 pm till 4 am or 5 am (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 of shares during normal stock market hours.
Do I Have to Buy 100 Shares at a Time In the US Too?
For US-listed stocks, we can just buy 1 share.
This is unlike for Singapore stocks, where we have to buy 100 shares at a go.
The low barrier to US shares also allows us to position 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$240 or S$335, without commission.
That equates to 6.7% of the portfolio.
However, if you were to invest in DBS Group (SGX: D05) at a share price of S$21.28 per share, you would need to fork out S$2,128, excluding fees, to buy 1 lot or 100 shares of the bank.
The outlay translates to 43% of your portfolio size.
Therefore, we may end up exposing our portfolio to higher risk than we would like.
How Do I Open a Brokerage Account?
To buy US shares, you must open a brokerage account that allows access to the US market.
To choose the best brokers (on top of low commissions), Seedly online brokerage review platform is the place to go!
Over there, you can sort according to “Most Popular”, “Most Reviewed”, and “Highest Rating”.
Once you have chosen the broker for you, you can simply head over to the broker’s site to start opening an account.
The brokerages can be generally broken down into the traditional Singapore brokers and overseas brokers.
Let’s look at each category here (for online trades only).
|Brokerage||Min. Fees (US$)||Trading Commissions||Custodian Fees|
|Cash funded trading accounts|
|SAXO Markets||3.00 (VIP) |
|0.04% (VIP) |
|0.06% p.a. (VIP)
to 0.12% p.a. (Classic)
(custodian fee calculated daily using the end of day values and charged on a monthly basis)
|Phillip Securities |
(POEMS Cash Plus)
(with asset value ≥ S$250k)
(with asset value ≤
(with asset value ≥ S$250k)
S$2 per counter per month
(with asset value ≤
|FSMOne||8.80||0.08%||No custodian fees|
|Maybank Kim Eng Securities|
|10.00||0.12%||S$2 per counter per month|
|Standard Chartered||10.00||0.25% |
(Personal Banking Clients)
(Priority Banking Clients)
|No custodian fees|
(Cash upfront rates applicable to Multi-Currency Accounts only)
|0.15%||S$2 per counter per month|
(Cash Upfront Trading)
|18.00||0.18%||S$2 per counter per month|
|UOB Kay Hian|
|20.00||0.18%||S$2 per counter per month|
|Basic trading accounts|
|CGS-CIMB Securities||20.00||0.30%||S$2 per counter per month|
|KGI Securities||20.00||0.30%||None stated|
|Lim & Tan Securities||20.00||0.30%||S$2 per counter per month|
|Maybank Kim Eng Securities||20.00||0.30%||S$2 per counter per month|
|OCBC Securities||20.00||0.30%||S$2 per counter per month|
|Phillip Securities||20.00||0.30%||S$2 per counter per month|
|RHB Securities||20.00||0.30%||S$2 per counter per month|
|UOB Kay Hian||20.00||0.30%||S$2 per counter per month|
|DBS Vickers||25.00||0.18%||S$2 per counter per month|
(Note: Custodian fees are waived if certain conditions are met. Typically, the fees will be waived if you trade at least two times per account per month or at least six times per account per quarter.)
Brokerage Min. Fees (US$) Trading Commissions Maintenance Fees
Firstrade 0.00 Flat N/A
TD Ameritrade 0.00 Flat N/A
1.00 US$0.005 per share, up to a maximum of 1% of trade value Up to US$10 per month, based on activity
Tiger Brokers 1.99 US$0.01 per share N/A
On top of brokerage and custodian fees for the brokers, investors also have to note other fees such as Securities and Exchange Commission (SEC) fees and dividend handling charges (if any), among others.
(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.)
Are There Taxes Involved?
Yes, there are taxes involved when investing in US shares as a Singaporean.
Investors need to take note of withholding tax for dividends, currency conversion fees, and US estate tax.
How to Research on US Stocks?
Researching US stocks to buy is made easy with stock screeners.
StocksCafe, Investing.com, MSN Money and Yahoo Finance provide screening of US-listed stocks.
Have Burning Questions Surrounding The Stock Market?
Why not check out the Seedly Community and participate in the lively discussion regarding stocks!
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 may have a vested interest in the companies mentioned.