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|Broker Name||Minimum Fees (USD)||Contract Value Fees (below $30,000)|
|Interactive Brokers||$1||US$ 0.005 per share|
|Saxo Markets||$3||US$ 0.01 per share|
|TD Ameritrade||$10.65||US$10.65 per trade|
|Philips Securities (POEMS)||$10.88||$10.88 per trade|
When owning shares, it indicates that you have partial ownership of the company you have invested in. You can earn returns from investing in shares via dividend paid out by the company or selling of the shares when the share price is higher than it is bought at.
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 SPDR S&P 500 Trust ETF tracks the S&P 500 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 to invest in, you can consider investing in ETFs instead.
Mutual fund (also sometimes known as Unit trust) is an actively-managed investment tool. It is a collective investment similar to an ETF. However, it does not track an index unlike an ETF. A mutual fund is a professionally managed investment fund that pools money from many investors into a common portfolio.
|Company name||Share price (as of 22 May 2020)||Dividend yield|
|Johnson & Johnson||US$146.71||2.74%|
When investing in US stocks, you have to fill in a declaration (Form W8-BEN) that you are a foreign beneficiary of income from those stocks to the US tax authority. Despite not having to pay capital gains tax on your stock investments, you will be subjected to a 30% withholding tax on your dividends.
This is not limited to US stocks but also applies to foreign stocks in general. When investing in the foreign stock markets, calculations are no longer as straightforward as compared to investing in Singapore stocks. Not only do you have to consider if your share price will increase or decrease, you need to take into account whether the currency in which the stock is denominated goes up or down against your base currency. In most cases of Singaporeans investing in the US stock market, it will be the US dollar against the Singapore dollar.
The first step in purchasing shares is to have a brokerage firm as the broker will help you execute your trades. You can choose from the local brokerage firms and US brokerage firms. Unlike investing in SG stocks, you do not need to have a central depository (CDP) account to invest in US stocks.
Before you can start investing, you would have to add funds into the brokerage account. Brokerages can have various payment methods such as bank transfers, cheque, etc. In the case of local brokerages, it may also include PayNow as a form of payment method.
Place an order with your broker to buy or sell your shares. Before placing an order, decide what kind of order you will be placing, i.e. market order or limit order, and also how long the order is valid for, e.g. expires at the end of the trading day or valid till a specific date. Do review your investments from time to time so that you are able to change investment strategies based on market movements if necessary.
When you want to invest in US stocks, you will need to have an investment brokerage account. With some many brokerages in the market, it may be difficult to choose one. Here are some factors you can take into consideration before making your choice.
There are many stock exchanges worldwide and it can be a form of diversification when you invest in stocks from different countries. If you have plans to but do not want to be limited to the US stocks, you may prefer to find a broker that has access to not only the US market but also securities markets of other countries.
Different brokerages have different platforms such as websites and mobile apps. It would be advisable to pick brokerages with platforms that you are more familiar or comfortable with. Do also take note of the interface and how user friendly are the platforms and it will affect your overall trading experience.
While selecting your preferred brokerage account, consider what you are planning to invest in. If you want to invest in other asset classes such as in currency (FOREX), CFDs, gold, bonds, you would then consider finding a broker that allows you to invest in these investments.
One of the most common concerns when choosing a brokerage firm is the fees. There are various types of fees but there are two that most would take note of. Firstly, it is the commission fee, which is the fee charged for every transaction. This is especially important for those who trade frequently. Another would be the minimum fee which is essentially the minimum fee charged regardless of the amount invested. This is usually a concern for small time investors.
While for the most part when using online brokerage, it is more of an independent task. However, at times there may be situations that arise where you require assistance and clarification so customer service comes in handy. One thing to note as due to the time difference between Singapore and the US, it can be helpful if the brokerage has 24/7 customer service such as a hotline or live chat.