How to Invest in US Stocks from Singapore: Guide to US Equity Market

I bought my first stock when I was still in NTU. It was an SGX listed stock that I acquired on 30 October 2006. Today, I spend most of my time building my portfolio of US stocks. Each of us has a different reason to enter the US equity market. Regardless, I will share with you all I know about investing in US stocks from Singapore in this article. Let’s get started!

Basic Knowledge on US Equity Market

Most of you reading this article have probably invested in SGX listed stocks before. There are several differences when it comes to investing in US stocks as compared to SGX listed stocks. Let us look into them in more detail.

1. The minimum number of shares to purchase

The minimum number of shares to purchase or lot size for SGX listed stocks is 100 shares. The new lot size takes effect from 19 January 2015. On the other hand, the US equity market does not operate based on lot size. That means you can buy your favourite stock for as little as 1 (one) share.

2. Share price fluctuation of US stocks as compared to Singapore stocks

For Singapore investors who are new to the US stock market, it is crucial to know that the share price of US stocks can fluctuate by quite a bit. It is not uncommon to see a share price falls by 10% or more when a company’s financial results deviate from what the market has expected. To reduce the anxiety related to price fluctuation, you may want to start with a smaller investment.

3. Trading hours of US markets

One main distinction between Singapore and the US stock markets lies in the trading hours. The US stock market opens from 9.30 am to 4 pm Eastern time. That translates to 9.30 pm to 4 am on the following day in Singapore. It may seem like you will have to stay awake through the night to participate in the US markets. The truth is that you don’t have to. I execute all my purchases within the first half an hour after the opening of the market. It has worked quite well for me so far.

Brokerage Firms with Access to US Equity Market

Once you have a good grasp of the mechanism of the US stock market, it is time for you to choose a broker which can give you access to the US equity market. There are many of them. However, we can generally classify them into two major categories – local and foreign brokers. I use both.

In general, I find foreign brokers tend to offer lower cost in acquiring US stocks. Recently, at least one foreign broker based in Singapore is also offering a commission-free execution.

There are several factors I consider when choosing a broker. I prefer it to be MAS-regulated, has a physical office in Singapore and cost-effective. At times, I agree to pay more for diversification. Remember MF Global?

Let us look at three popular brokers to buy US stocks in Singapore. They are Saxo Capital Markets, TD Ameritrade and Tiger.

1. The minimum initial deposit to open an account

When you decide to enter the US equity market for the first time, you may want to consider putting in a small initial sum. Each broker requires a different initial deposit to open an account with them. Saxo Capital Markets needs S$ 3,000 of initial deposit. On the other hand, TD Ameritrade and Tiger do not require any minimum initial deposit. If this is one of your primary considerations in opening an account with a broker, TD Ameritrade or Tiger is probably more suitable for you.

2. Commission Fees

Yes, the commission fee applies to the US stocks as well. In recent time, there have been several brokers that charge no commission for the trade executed. For those that are still charging a commission, the amount has been declining. Saxo Capital Markets charges a commission between USD 4 to USD 100. Tiger charges USD 0.01 per share and subject to a minimum of USD 1.99 per trade. When it comes to commission, TD Ameritrade is probably the most competitive. It offers commission-free execution.

Forex Conversion from SGD to USD

Foreign exchange difference can have a significant impact on your portfolio return. As the shares in the US stock markets are in USD, you may need to convert your cash from SGD to USD before remitting it to your broker.

Other Resources to Invest in US Stocks Successfully

I believe knowledge plays a crucial role in the success of investing. If you have just started your journey in the financial market, you may want to check out the article I have written on investment. Investment is part of the bigger picture of personal finance. This article shares how you can manage your personal finance in three simple steps. Thank you for reading this article. I shall see you at the next!

Written by Yanto Wong