- Min. Commission Fee SG Stocks
- Stock Holding Type
- Min. Funding
- Min. Commission Fee for SG Stocks
- Stock Holding Type
- Min. Funding
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Saving money in your bank account is only the beginning of your wealth accumulation journey. However, with bank interest rates remaining low and oftentimes lower than the inflation rate, we have to find investments that generate higher returns higher to stay ahead of inflation. One common investments investors turn to are shares. Investing in shares has several advantages.
Shares have the potential to increase in value over time. When we buy shares in a company, we are essentially owning a part of the business. Over time, the business can have growth in their profits when their business expands. Hence, the value of our ownership in the business will also increase resulting in a growth in share price. This growth in share price is known as capital growth and if we sell the shares, the profit earned is termed as “capital gains”. In the event if we sold the shares at a lower price than the price we got it for, it will result in a “capital loss”. When buying Singapore stocks, there is no income tax due on sales of shares as there is no capital gains tax.
Besides selling shares, shares can generate returns when we hold them in the form of dividends. When a company makes a profit, it can use the profits for multiple purposes. The company can reinvest their profits into the company to grow the business, keep it for future opportunities and/or distribute it amongst the shareholders as dividends. Dividends can be paid annually, semi-annual or quarterly. For those who are looking to earn a passive income, you can look for companies that have consistent dividend payouts. Similar to capital growth, dividends paid by a Singapore resident company is not taxed which is an advantage of buying Singapore stocks.
Investors can invest in shares of different companies with small amounts of money as only a minimum of 100 shares is required each. There are over 700 listed companies on the Singapore Exchange. Each of these companies are of different businesses targeting different markets with varying growth. By investing in more than one company, we are not making a huge investment on a single company which allows us to spread our risk. An alternative to diversify our investments can be done through Exchange Traded Funds or Unit trusts.
The liquidity of shares is a selling point for many investors as we can purchase or sell shares easily when we want to. The only requirement is that the number of shares (or ETFs) bought or sold has to be a minimum of 100. This can be done via a brokerage’s online services or the broker’s representatives.
When buying into SG shares (or ETFs), we are able to easily check the market price of the shares which is the price the shares are bought and sold at. This is because the shares are listed and traded on the Singapore Stock Exchange. By knowing the market price, we can then decide whether to sell or purchase the shares at the current market price or to wait for our desired pricing which may take a longer time.
|Broker Name||Minimum Fees (SGD)||Contract Value Fees|
|Philips Securities (prepaid)||$10||0.12%|
|UOB KayHian (prepaid)||$10||0.12%|
|OCBC Securities (prepaid)||$18||0.18%|
|RHB Securities||$25||0.275% (for SGD50,000 and below)|
|DBS Vickers||$25||0.28% (for SGD50,000 and below)|
|Citibank||$28||0.25% (for SGD50,000 and below)|
|Broker Name||Minimum Fund (SGD)||Myinfo Linked Account|
|Philips Securities (prepaid)||$0||Yes|
|UOB KayHian (prepaid)||$0||No|
|OCBC Securities (prepaid)||$1000 (below 21 years old), $2000 (foreigners)||No|
When investing in stocks, you will have partial ownership of the company you have invested in. It will also give you the right to the profits generated by the company in the form of dividends. However, do take note that depending on the company’s performance a company may or may not pay dividends. Hence, it is not only important to to understand the company you are buying into, but the industry it is in. Another plus point would be to check the dividend payout history to check the consistency of dividend payouts by the company.
ETFs is a collective investment where you are investing in a basket of stocks (or bonds). An ETF aims to track a particular index. For example, the STI ETF tracks the Straits Times Index. The returns of an ETF are meant to match the index that it tracks. So for those who are unable to choose which stocks listed in the SGX to invest in, you can consider investing in ETFs instead.
REITs are like the real estate version of shares. While having shares allows you to have partial ownership of a company, REITs on the other hand allows you to be part-landlord of a chain of properties. One common example would be the CapitaLand Mall Trust.
Consider a bond to be similar to a loan where you are essentially lending money to the bond issuer. Like loans, most bonds pay bond holders interest, have a principal loan amount known as the par value and a tenure (time till loan is repaid). Before the maturity date, bond holders will receive payments from bond issuers as a form of interest. Upon maturity of the bond, the issuer of the bond will pay 100% of the par value to bond holders.
|Company name||Share price (as of 19 May 2020)||Dividend yield|
|Singapore Airlines Ltd||$3.70||5.42%|
|Wilmar International Ltd||$3.86||2.61%|
When investing in stocks, you have to sign up for a investment brokerage account before you can start your investments regardless of the stocks you want to buy on the SGX. By having a brokerage, it enables you to purchase and sell stocks on the SGX and some brokerage allows you to do so on other stock exchanges. There are many things to take note of when choosing an investment brokerage firm, with commission fee being one of them.
Based on the investment brokerage you have chosen, you may be required to open a Central Depository (CDP) Account, a subsidiary of Singapore Exchange (SGX). It provides integrated clearing, settlement and depository facilities for investors. Certain brokerages allow you to apply for both a brokerage account and a CDP account at the same time. Alternatively, you can apply directly via the SGX website.
Do take note if the brokerage account you have opted for is a prepaid account. If so, you are required to transfer funds into your account before you can start buying shares. In most cases for online brokerages, you can do this conveniently via PayNow transfer or bank transfer.
Even though we have only one stock market (SGX) to buy SG stocks, there are over 700 companies listed. Choosing what to buy can be a hassle so before you start, there are some things you need to consider.
Before you even start investing, you should always think out what you want to achieve out of it as the first step. This will help to guide you in choosing what to invest in. If you are someone who is looking for passive income, then your focus will be on dividend-yielding stocks. For someone who wants quick returns, your focus won’t be on dividends but perhaps on young companies that show positive indicators and potential for growth. So do take the time to consider your investment objectives first.
In terms of risk, are you willing to take higher risk or prefer to not worry too much about your investment. This can give you a guide to what kind of stocks are the most suitable for you. Do note that the general rule of “high risk, high (potential for) returns”. If you are someone who has a low-risk profile, you can consider to invest in blue chip stocks. Alternative, you can consider diversified investments such as ETFs or Unit trusts.
Do you plan to buy and hold your stocks for a long time? Or are you the hands-on type who wants to buy low and sell high frequently? This would help you choose the right investment brokerage. If you're a long-term passive investor, look for a secure, stable brokerage. If you're a day trader, then low commissions and quick response would be the most important factors for you.
When you want to invest in SG stocks (or stocks in general), you will realise that there are so many different brokerages. Here are some factors to consider when choosing your investment brokerage.
Whenever you buy or sell shares, you will be charged a commission fee. This is important if you are planning to trade frequently and you will tend to look for a broker that charges low commission fees. If you are not trading frequently and more or the buy-and-hold investor, commission fee may be of lesser importance. Another fee you can take note in this case would be the minimum fee as you will be the minimum amount to be charged regardless of trade amount. This is especially important for those trading in small amounts. For example, if the minimum fee is $15 and commission fee is 0.5% of the trade amount, by investing $1000 the commission fee charged is $5. However, this falls short of the minimum fee so you will be charged $15 instead of $5.
Between a CDP brokerage account and a custodian brokerage account, there is no better one as each has their own merits. It boils down to what you value more as an investor. Ideally, you want your shares to be under your name. In that case, a CDP brokerage account would be more suitable. However, most of the cheaper investment brokerages are custodian accounts. Hence, if fees is something you are very concerned about then a custodian account may be more of your cup of tea.
When it comes to online investment brokerages, it is more or less self-service. Hence, you would want a platform that you are more comfortable with so that you are able to trade your shares easily. Some platforms available are IOS mobile applications, android mobile applications and websites. So if you are someone who prefers trading on the go, a mobile application may be better. Do also check out the interface of the platform that it is easy for you to use and also understand.
Before investing in stocks, you will need to fund the brokerage account. It will be good to check the available methods of transferring funds for each of the different brokerages. Some methods available can be via bank transfer and PayNow. Choose a brokerage that provides your preferred mode of payment.
The brokerage you have chosen provides with analyst reports and updates on the market. Educational materials are also provided by certain brokerages such as demo accounts and tutorials. If you are interested in market research and analysis, this may be a point to take note of this when choosing your broker.
While online investment brokerage is oftentimes a self-service affair, one should not overlook customer service. A brokerage with good customer service comes in handy when you have enquiries and issues to resolve. Things you can keep a look out for are the ways you can contact the broker such via phone, email or live chat and the timings these options are available.