Best Online Investment Brokerage, Trading Platform Singapore 2021

Why Investing is Smarter Than Savings

How to save money? Saving money is essentially hoarding. You might make a little extra cash from the interest generated from your savings account, but it won’t amount to much. Investing, on the other hand, is about growing your money through the purchase of assets that appreciate in value or generate income. These assets can include stocks, bonds, art, and property. You’ll need to save and invest to reach your financial goals.

Why a Savings-Only Approach Doesn’t Work

Prices of everyday necessities rise over time due to inflation. If you check out the Consumer Price Index (CPI), you will see just how much prices have risen in recent years – the CPI has averaged about 4%. Meanwhile, the money you’ve tucked under your bed will not rise with inflation but, in fact, may decrease in value. So, assuming that the CPI stays at 4% over the next 10 years, your money will actually be worth about 30% less at the end of that period – even if you put your money into a savings account, the interest generated won’t even come close to the 4% CPI.

Investing In Equities Is a Good Hedge Against Inflation

You don’t need a huge amount of money to start investing. In fact, you can start investing with just S$1,000. There are plenty of investment products on the market that can beat inflation, such as Singapore REITs which can yield as much as 9%. If you have the capital, you can even invest in perpetual income bonds to enjoy regular payouts. Another benefit of equities is that they are highly liquid – meaning you can buy and sell them in a matter of minutes.

You Can Also Boost Your CPF Account With Equities

If you intend to rely on your CPF account for retirement, you should know that the CPF only grows at 2.5% interest rate per annum with your Ordinary Account (OA) and 4% with your Special Account (SA). If you have more than $20,000 in your OA and more than $40,000 in your SA, you can invest a portion of it in stocks. That will allow you to beat CPF’s 2.5% return with something like a Singapore REIT.

How to Choose the Best Brokerage Firm For You

Finding the right brokerage that is aligned with your investment goals, educational needs, and learning style is fundamental to your success as an online investor. While all online brokerage firms may provide you with the convenience of investing online, the fees structure, platform features, and customer support accessibility may vary. Strike the right balance by using the following guide to choose the brokerage for you:

#1Brokerage Fees

When choosing a broker, most investors will first consider the various fees charged by brokerage firms – do take note you should not just be looking out for the lowest commission fees. Instead, first consider how often you are planning to buy and sell shares. If you intend to buy and sell frequently as active traders do, then it will make sense for you to choose a brokerage account with lower commission fees. Next, you should consider how much you plan to invest. In the case of small-time investors, you should also take note of the minimum commission fee that will be charged per trade.

#2Usability of the App / Platform

While choosing your brokerage firm, do consider the available trading platforms and mobile apps for it will affect your investing experience. Different brokerages offer different trading platforms such as desktop, iOS, and android applications. With a demo account, check out the different platforms and the interfaces before you make a decision. Finally, pick a platform suitable for you based on your usage and stylistic preferences.

#3Ease of Opening Account

Another thing you would want to look out for is the account application process. Generally, brokerage firms in Singapore will allow Singapore citizens and PRs (Permanent Residents) to use SingPass MyInfo to sign up for an account – eliminating the need for forms, and supporting documents.

#4Scope of Products you can Trade

While browsing for a brokerage account, first consider which trading products you plan to invest in. If you have plans to invest in not only Singapore stocks but also US stocks, you may prefer to find a broker that has access to both SGX stocks and those in the US market. If you want to invest in other asset classes such as CFDs, gold, and REITs, you should then consider finding a broker that allows you to access these products too.

#5Minimum Funding

Before you invest, you should also have your budget ready so you can select a trading account that suits your wallet. Many brokerage firms have minimum funding requirements for their different account types, such as S$3,000 minimum deposit for Saxo's Classic account, S$300,000 for a Saxo Platinum account, and S$1,500,000 for a VIP account. Likewise, you will also find brokerage accounts that do not require minimum funding, such as TD Ameritrade. Scroll up to view and compare different online brokerages' account types and minimum funding requirements.

#6Research Material and Insights

Most brokerage firms provide news and research materials prepared by their in-house professional analysts and experts to help investors interpret market behaviour and understand stock performance of companies. Some brokers also hold webinars and events where professional investors and traders share their views on the market's direction and answer questions posed by fellow traders and investors.

Types of Investment Brokerage Fees or Costs

Commissions Fees

Commission fees are service charges that you will be required to pay your broker or brokerage firm every time you execute a trade. That's to say, if you are an active trader, you will find yourself paying multiple commission fees in the long run. However, if you are a long-term investor, you may not be too concerned about chalking up commission fees. Therefore, it's important to plan your trading volume and consider a brokerage firm that suits your trading appetite. In recent years, most brokerage firms have started offering no commission fees programmes – in Singapore too.

Spreads

Spreads refer to the difference in the selling and buying price of a trading product – and you incur gains or losses depending on the difference in prices. When dealing with products with spreads such as forex or commodities spreads, traders are looking to profit from the transaction.

Clearing & Trading Fee

If you are using a CDP (Central Depository) account, you’ll be subjected to clearing fees each time you complete a transaction with the Central Depository. As of October 2020, the clearing fee was 0.0325% of the contract value. This aside, you will also need to pay a trading fee of 0.0075% of the contract value as mandated by the SGX (Singapore Exchange).

Online Brokerage Fee Comparison Singapore 2021

Brokerage Firm	Min. Fees SG Stocks	Min. Fees US Stocks
Saxo Markets	S$5	US$ 4
City Index	S$10 (CFD Stocks)	US$15 (CFD Stocks)
CMC Markets	S$10 (CFD Stocks)	US$10 (CFD Stocks)
IG	S$10 (CFD Stocks)	US$ 10 (CFD Stocks)
CGS CIMB	S$25	US$20
UOB KayHian	S$18	US$ 20
OCBC Securities	S$25	US$ 20
DBS Vickers	S$25	US$ 25
TD Ameritrade	Not Applicable	US$0
PhillipCapital (POEMS)	0.08%	US$3.88
Tiger Brokers	0.08% of Trade Value	US$1.99
moomoo by Futu	S$0.99	US$0.99

Difference Between Stocks CFDs and Stocks

What is the difference between stocks CFDs and stocks? When you trade stock CFDs (Contract for Difference), you do not buy or sell the actual stock but are simply purchasing a contract which allows you to speculate its price movements. Share trading, on the other hand, is when you purchase a stock and have legal ownership of the stock – either in your personal CDP (Central Depository Singapore) account where purchased stocks are held in your name, or your custodian account managed by your brokerage firm. The same applies for other asset classes as well, so you may find FX CFDs, commodities CFDs, ETF CFDs, and more. No matter which asset class, CFDs are leveraged products – meaning you will only have to deposit a fraction of the actual asset value per trade. This way, you are trading on margin – and while your profits will be magnified, your losses will be, too. Take for instance, if the margin requirement of stock CFDs at your brokerage is 2%, and you want to buy an asset with a total value of SGD$100,000, you will only essentially need to fork out S$2,000 from your funds to trade this stock CFD of choice. If the total asset value appreciates by 1% and is now worth S$101,000, it theoretically means you have gained $1,000 from your $2,000 – or a return of 50%. That's to say, a 2% margin means you are leveraged 50 times (1 / 0.02), so your profits and losses are multiplied 50 times for a 1% move in the asset, or 100 times for 2% move, and so forth.

Types of Products Offered by Online Brokerages

Login to any online brokerage website and you will find a list of trading products: stocks, ETFs, bonds, commodities, options, futures, funds, forex, and CFDs. These products can be further differentiated into two categories: asset classes, and financial instruments. What's the difference? Asset classes are the products that you can trade or invest in, while financial instruments are the different ways or methods you can trade securities across asset classes.

Forex (FX)Asset Class

Forex trading involves the price movements of major, minor and exotic currency pairs across the globe – such as the EUR/ USD, and USD/ SGD. Just remember this: participating in forex trading is conceptually the same as going to the money changer. When you buy USD/ SGD, you’ll receive (your buy) USD in exchange (your sell) for your SGD.

CommoditiesAsset Class

Commodity trading involves gaining exposure in natural or grown commodities such as gold, silver, energy (oil, natural gas, etc) and agriculture (corn, soybeans, etc). Commodities are an interesting asset class to trade in as you have to be fully aware of the economic, political and weather developments.

EquitiesAsset Class

Shares, otherwise known as stocks, are securities that signify part-ownership of a company. This means, if you have Singtel or CapitaLand shares, you’re a part-owner of that company. Hence, It is important to use fundamental analysis to understand what business the company is involved in. Stocks often offer dividends which could be a significant portion of your total returns.

BondsAsset Class

Bonds are considered fixed income instruments because when you own a bond, you are entitled to fixed and periodic payments. So, you can think of yourself as a lender of money to a borrower. And the payments are the interest you earned on the principal amount or the amount you lent.

IndexAsset Class

In financial markets, an index is a financial measure of a certain portfolio of securities (be it stocks or bonds). In Singapore, the Straits Times Index (STI) tracks the performance of the top 30 companies listed on the Singapore Exchange. The 30 STI stocks were selected to best indicate Singapore’s economic health. You typically gain exposure in Indices via financial instruments called CFDs or by buying ETFs.

ETFsAsset Class

An ETF (Exchange-Traded Fund) is a collection of securities (normally stocks) which tracks or replicates the performance of an underlying index. One such example is the STI ETF, which tracks the Straits Times Index. ETFs can consist of various asset classes such as stocks, commodities, bonds, or a mixture of the above. Since an ETF is marketed as a security, it has a buy and sell price and can be traded on an exchange.

CFDsFinancial Instrument

A CFD (Contract For Difference) is a contract between you and the brokerage firm to exchange the difference in the value of an asset between the time you first open a position and when you close it. Most brokerages offering CFDs will offer CFDs across main asset classes such as FX, equities and commodities.

FuturesFinancial Instrument

Futures are financial contracts that obligate traders to transact an asset at a predetermined date and price in the future. Futures are traded on an exchange and you can buy futures on a variety of asset classes such as forex, commodities, equities, and indices.

Mutual FundsFinancial Instrument

Mutual funds or unit trusts are pools of money collected from investors and subsequently invested in a diversified basket of securities such as stocks, and commodities. Since these funds will be used to buy a variety of securities, and other asset classes at times, it is generally considered a safer investment instrument.

How to Choose Which Financial Product to Invest In

Understand the products you want to trade

FX, stocks, commodities, ETFs, and indices are all different products and it would be good to fully understand the specifics before deciding to take a position in them. Thereafter, you also have to keep yourself updated with the news in the financial markets as they will greatly influences price movements of your positions.

Understand your goals, time horizon and risk appetite

What should I invest in? How much money do I need to invest? Consider these 3 things: First, every investment product comes with risk so you have to consider your personal risk profile before investing. Second, goals. What do you want to takeaway from your investments? Finally, consider the time you are willing to set aside for daily or weekly investment research and analysis? Speaking of time, there is also the ‘time horizon’ – basically how long you would be comfortable to leave your investments aside to grow. If you have a longer time horizon, you may not necessarily need high return rates to reach your financial goals due to the power of compounding.

Understanding The Different Types of Investment Strategies

Passive Investing: If you are a passive investor, you may prefer to take the safer route to financial security and may have a lower tolerance for risk. You may be more conservative, prefer to rely on time, and compounding interest to make money. You are not too worried about getting the highest possible returns as long as your investments are able to beat inflation. You are also big on principal protection, meaning you want to make sure that the original amount invested never decreases. A passive investor like yourself would buy blue-chip stocks with consistent performance.
Growth Investing: If you are a growth investor, you are looking to gain (and lose) money within the shortest time possible. You have a greater appetite for risk, higher tolerance for losses, and are willing to take losses for the opportunity of a bigger future payoff. You may consider yourself a calculated gambler, prefer an “all or nothing” approach, and may try to “time” the market – buying when prices bottom out and selling when they peak. However, do note that this trading strategy is not suitable for amateur investors as you will need experience and knowledge of chart reading, indicators, and fundamental investment analysis.
Value Investing: If you are a value investor, you buy “hidden gems” in the stock market at lower-than-expected prices. You would only sell these gems when the prices meet your expectations and projections – but this can take a long time. You critically analyse the market and use fundamental analysis to identify companies that are underpriced. For instance, you would be interested to research and buy stocks of a publicly-traded tech company which promises to solve certain real-world problems within the next 2 to 10 years.
Hands-Off Investing: If you are a hands-off investor, you prefer to let someone else manage your portfolios – such as fund managers, or via investment-linked insurance policies. You prefer the convenience of hands-off investing because you may not have the time or bandwidth to execute in-depth research nor spend time on the actual investment process. One of your major concerns will surround finding a trustworthy and reliable fund manager who will get you the results you have in mind. Do take note that your fund manager’s fees will be deducted from your investment returns.

Stock Trading in Singapore for Beginners

When investing, the key to a balanced risk profile is diversification. Take this simple example: if you were to invest all your funds in one or two stocks and these companies go bankrupt, you will likely lose all the money you have invested. To lower your risk, you would want to buy different stocks, or approximately 20 to 30 stocks. Alternatively, you can diversify your investment portfolio by investing in different asset classes such as bonds, currencies, and REITs instead of sticking to only conventional stock investing. Finally, consider investing in ETFs or mutual funds which are diversified in nature. Here are the steps to start trading stocks in Singapore:

Step 1Check your eligibility

If you want to start trading investment products in Singapore, you must be above 18 years old and not an undischarged bankrupt at the time of application. Also, decide the minimum fund with which you are comfortable to start your investment journey.

Step 2Open a CDP Account

The Central Depository (CDP) account, managed by the Singapore Exchange, allows you to safely keep the shares you have bought. You can create your CDP account online.

Step 3Open a trading account with you chosen Brokerage

A trading account allows you to buy and sell shares in the Singapore securities market. There are many different brokerage firms for investors to choose from. Do note that an investor may also have multiple trading accounts with different brokerages simultaneously.

Step 4Choose the stocks you want to buy

Some factors to consider when choosing what shares to buy is the industry, business model, management, growth indicators (share price or dividend yields), stability (debt/ EBITDA ratio). Finally, does the stock you investing in suit your investment style, strategy, and risk appetite?

Step 5Place an Order

Place an order with your broker to buy or sell your shares. Before placing an order, decide what kind of order you want to place, i.e. market order or limit order. Also, how long will the order be valid for – does it expire at the end of the trading day or will it be valid till a specific date?

Step 6Regular investment portfolio review

Are you a short-term or long-term investor? How often will you review your investments? Regardless of what kind of investor you are, it is advisable that you review your investments from time to time so that you are able to make investment decisions or change investment strategies based on market movements. If you are unsure, always seek advice from a professional such as your broker or advisor.

What Does a Diversified Portfolio Look Like?

An investment portfolio that’s property diversified will exhibit the following characteristics:

Mix of Different Asset Classes

Asset classes include stocks, bonds, commodities such as gold, and even property. Each asset class comes with its own set of risks and market movements, but it’s highly unlikely that all of them will decline at the same time.

Investments In Lowly-Correlated Industries

If you invest in gold Exchange Traded Funds (ETF) and invest in a gold mining company, they’re considered high-correlation assets. That means, if gold falls, you can expect both investments to fall even though they’re in different asset classes. So, invest in assets that aren’t closely correlated with each other.

Assets with Varying Rates of Risk and Return

It’s impossible to invest solely in low risk or high risk assets – low risk generally means low return and high risk means putting your entire investment portfolio in danger. The solution is to mix the two so that under-performing assets can be offset by the gains of other assets.

How Do You Diversify Your Portfolio?

Diversification depends on your individual goals. Your portfolio must be diversified based on how long you want to stay invested (investment horizon) and what your financial end goal is. Ideally, you should speak to a stock broker or a financial adviser (FA) regarding your goals. The last thing you want to do is spread your capital on random investment choices without knowing how well your investments will perform.

CFD Trading for Beginners

CFD stands for Contracts of Difference where two parties agree to exchange the difference in value of a specific asset from the time that the position is opened until it is closed. When you buy or sell a position, you can incur profit or losses depending on the market movements. Given that a CFD is a derivative product, its value is always based on an underlying asset. However, CFD trading may not be suitable for everyone and can result in losses that exceed your deposits. So, please ensure that you fully understand the risks involved. Do take note that there will be overnight financing charges – an important fee in CFD trading which can significantly affect your profits. Some popular CFD products include:

Forex

When it comes to Forex trading with CFD, you can start with a small capital. You adjust your position by analysing the market movements and speculate whether a particular currency will move up or down in relation to another currency pair.

Shares

With shares for CFDs, you will not have to pay stamp duty – meaning shares CFDs are not taxable assets since you do not actually have ownership of the shares. While trading CFDs, you have the option to go long or go short depending the micro movements of the market. CFD trading, however, is usually not suitable for amateurs who do not have experience with market movements and may incur significant losses.

Cryptocurrencies

With crypto CFDs, you basically speculate the differences in value across a number of popular cryptocurrency products such as Bitcoin, Ether, Litecoin, Ripple, Stellar, NEO and EOS. This means you can take advantage of the volatility of these cryptocurrencies by predicting the rise and fall of their value.

Frequently Asked Questions

What is an Investment Brokerage Firm?: An investment brokerage firm allows you to buy and sell shares on the stock market. Every investor needs to choose an investment brokerage firm before they can start investing and trading. You'll want to choose a brokerage that suits and understands your needs, especially if you're just starting out. Typically, you get charged commission fees each time you conduct an online trade. That’s why frequent traders choose a brokerage firm with the lowest brokerage commission.
Who can open an online trading account?: If you’re above 18 years old and not an undischarged bankrupt, you can open an online trading account in Singapore. Even if you’re a foreigner working outside of Singapore, you can open a trading account any time you want as long as you meet the above requirements.
How much do I need to pay to open a trading account?: The initial deposit required by brokerage firms in Singapore varies. To accommodate the different risk appetites and budget of individuals, brokerage firms offer different funding tiers. For example, Saxo Markets requires a minimum S$3,000 funding for a Classic Account whereas IG does not have any minimum funding requirements.
How long does it take to process a new trading account?: The time it takes to successfully open an online trading account depends on the internal process of your chosen brokerage firm. It usually takes 10 working days to complete the process upon application submission.
What are the different types of trading markets in Singapore?: Singapore Exchange or SGX is the stock trading market in Singapore. It offers an extensive suite of investment products that include securities, derivatives, and commodities.
How do I open a CDP account?: There are 2 ways to open a CDP account. You can either go directly to the Central Depository to process your own account or seek assistance from an investment brokerage firm.
What is the difference between Cash Upfront Trading and Cash Account?: Used as collateral, cash upfront trading requires you to pre-fund your account before you can start trading. Usually, this type of account has lower commission fees since your purchased stocks are held by the brokerage firm. Cash account trading, on the other hand, doesn’t require prepayment. It makes use of the available cash in the fund. This means you can only trade when there’s enough capital in your account. Without sufficient funds, you won’t be able to enter a trade transaction.
What's the difference between a CDP and a Custodian Account?: These terms are more relevant when you intend to purchase stocks and shares in Singapore. CDP is a depository account that applies to the securities market in Singapore. With a CDP account, you will be able to purchase stocks legally in your name and become the owner of the stocks you've purchased. Since the stocks are now yours, you’ll have access to all the benefits of a stockholder. Your CDP account also stores your SGX stocks in a centralised location, so you can buy and sell from different brokerage firms. The downside of storing your stocks in your CDP account is cost – you may incur more fees when you buy and sell via brokers but transfer your stocks to your personal CDP account instead of storing them in a custodian account managed by the brokerage. With a custodian account, your stocks are in the custody of the brokerage firm. This means you’re not the rightful owner of your purchased stocks because they’re held under a trust. While a custody account may grant you lower trading fees, you’ll still incur additional account maintenance fees if you don’t fulfil the quarterly trade requirements. In Singapore, most brokerage firms hold your stocks with the CDP. So, even when you execute the trade through them, no one else owns the stocks but you.
What is margin trading?: Margin trading is done by borrowing money from your broker to execute a trade in hopes of profit. The profits (if any) are used to repay your broker. As such, you can start with a small investment, but the risk is significantly higher. Here’s an example, you can buy 250,000 USD/ SGD with a margin of only 2%, which translates to 5,000 USD. This also means that you are leveraged 50 times – in other words, you are only forking out 5,000 USD to gain an exposure of 250,000 USD.
What is initial margin, maintenance margin and margin call?: There are two types of margins – initial margin, and maintenance margin. A margin call is an alert. Initial margin is the deposit needed for each trade that you enter in. If your initial margin falls short along the trade process, you’ll be given a margin call which alerts you each time your funds fall below the minimum requirement. As such, in order to keep your position open, you must ensure that the available funds in your account meets the maintenance margin.

Compare the Best Online Investment Brokerages in Singapore 2021

Refine Your Results

S$3,000

Saxo Markets

$1

Tiger Brokers

$0

moomoo (by FUTU)

$0

Standard Chartered Online Trading

S$2,000

Saxo Regular Savings Plan

S$0

IG

$0

Interactive Brokers

US$3,500

TD Ameritrade

S$0

CMC

S$0

CGS-CIMB Securities

S$0

City Index

$1,000

PhillipCapital (POEMS)

S$0

Phillip MetaTrader 5

S$0

OCBC Securities

S$0

UOB Kay Hian

S$0

DBS Vickers