If all the crypto talk about town has you interested in knowing invest your money for juicy returns but with lower risk, here’s a crash course on how to buy US stocks in Singapore and the best investment brokerages to use.
Disclaimers: I’m not a licensed financial advisor; MAS did not review this blog post; investing involves the risk of losing your capital, etc. Please do your due diligence before investing!
How to buy US stocks in Singapore: 3 easy steps
1. Open an investment brokerage account on MoneySmart
We’ve compiled the best investment platforms for US stocks right here. Alternatively, scroll down to learn more about our recommendations and you can sign up directly on this page.
2. Fund your investment brokerage account
Some brokers do require a minimum funding so you can get started, e.g. S$3,000 or US$3,000. You’ll need to transfer at least that much per the broker’s instructions. Most accept PayNow and FAST transfers so it’s not rocket science.
3. Start investing in US stocks or ETFs!
Once the money is in your investment account, you can officially start investing in US stocks. The US stock market is huge, so we’ll give you some starting-out tips below. It’s not that difficult, we promise.
3 best investment brokers in Singapore for US stocks
Even if you already have an investment brokerage for SGX stocks, we highly recommend comparing commission fees anyway, because brokers charge differently for US stocks.
For example, DBS Vickers charges at least 0.15% (minimum US$18) for US stocks. That’s OK if you’re investing a large sum, but if you only invest a few thousand bucks, US$18 is a hefty price to pay.
Here are our recommendations:
SAXO Markets is one of the most popular all-purpose investment brokerages for the US as well as other stock markets. You can sign up immediately via SingPass, the app is super easy to use, and the commission fees are low. It’s hard to go wrong with this one.
- Commission Fee US Stocks
- Stock Holding Type
- Min. Funding
TD Ameritrade’s Thinkorswim is a great competitor to SAXO because it has no commission fees for US stocks and ETFs. But it’s only good for the US; you can’t invest in other markets (scroll down to see why you might want to invest in Irish ETFs!). Signing up is also more of a hassle than with SAXO.
- Min. Commission Fee US Stocks
- Stock Holding Type
- Min. Funding
PhillipCapital’s POEMS is a familiar local investment platform that also offers access to US stocks at pretty decent fees. A great option for local investors who want to get their feet wet.
US stock market index ETFs or individual stocks?
After you’re all set up with the broker of your choice, you’ll need to decide on what exactly to invest in. There are, broadly, two options: ETFs or individual stocks.
Recommended US stock market index ETFs for beginners are VTI (Vanguard Total Index, tracks entire US stock market) or VOO (Vanguard 500, tracks the S&P 500, i.e. the 500 top-performing US stocks).
These are good for US stock newbies because:
- They track more or less the entire market, which is known to perform very well as a whole.
- Highly diversified (they put your eggs in literally hundreds of baskets!) which makes them much lower risk than picking stocks.
- Although ETFs do have fees known as “expense ratios”, both VTI and VOO have very low fees of 0.03%.
If you’re more of a confident investor and want to buy individual US stocks, start by researching the top 10 or 20 companies that make up the S&P 500. There will be plenty of familiar names like Apple, Google, Facebook, Amazon and so on.
Word of caution: US stock-picking can be pretty exhausting as there’s just so much to research and news to follow. If you are lazy, go for an ETF!
Other than commission fees, what are the other costs?
There are a few fees/costs that are generally unavoidable if you invest in US stocks.
Custodian fees: There’s no US equivalent of the CDP account, so all US stocks will be held in a custodian account. Your broker may charge a small custodian fee to cover these admin costs. For example, SAXO charges 0.12% per annum on your portfolio.
Forex rates: In order to buy US stocks, the broker will need to convert your SGD funds to USD at their own rates, which may not be very favourable to us. Unfortunately, brokers do not declare their forex rates so it’s hard to compare.
Dividend withholding taxes: Whenever US stocks or ETF dividends go to non-US residents, the US taxes us 30% of the amount. For example, if you get $100 in dividends, the US government takes $30 and you get only $70.
Expense ratios (for ETFs): The expense ratios for a standard US all-market or S&P 500 ETFs can be as low as 0.03%. When investing in ETFs, always stick to low expense ratios.
Should you bother with Ireland-domiciled ETFs?
Some Singapore investors are bothered by the 30% dividend withholding taxes and opt for Ireland-domiciled “clones” of US ETFs. That reduces the dividend tax to 15%.
But, these “clones” usually have higher expense ratios than their US counterparts. Here’s a look at some popular Ireland-domiciled ETFs for the S&P 500 index.
|S&P 500 ETF||Dividend tax||Expense ratio|
Should you bother? Personally, I wouldn’t sweat it, since US stocks are more about growth than dividends anyway.
In addition, you have to buy Ireland-domiciled ETFs on the London Stock Exchange or some other European stock exchange — not the US market. That opens you up to another world of commission fees and forex rates.
A final note: Why invest in US stocks at all?
I should mention that although “US stocks” sounds like you’re investing in the US domestic economy, you’re actually investing globally.
Among the list of top 10 US stocks on the S&P 500 are brands that we use almost every day, right here in Singapore:
- Alphabet (Google)
- Berkshire Hathaway
- Johnson & Johnson
So although these companies are listed on the US stock market, they’re mostly multi-national companies with products around the globe. What’s more, many are big tech companies so they aren’t even bound by physical geography.
We hope the above crash course has given you the confidence to start buying US stocks in Singapore. If you need more information, feel free to browse the best investment brokerages in Singapore.
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