Saturday, January 1, 2011

Choosing a broker for trading US stocks

I have encountered several inquiries on internet forums on choosing a suitable broker for trading US stocks. I would like to share what I know and have done based on my own research gathered sometime ago when I hunted for a broker for US stocks. If you are a Singaporean looking for a suitable broker for US stocks, please read on.

If you are a Singaporean wanting to trade US stocks, then using a US broker will compare favourably with our local brokers. The trading fees charged by our local brokers are much more expensive compared to US brokers. US brokers commission fees range from USD9.99 to USD19.99 per trade. Unlike our Singaporean brokers who charge a percentage of the trading principal, the US brokers charge a fixed commission per transaction regardless of size. This can result in huge savings if your trading principal is large enough.

Interactive Brokers is amazingly cheap. I do not use Interactive Brokers and shall refrain from further comment.
http://www.interactivebrokers.com/en/p.php?f=commission

Local brokers charge extra fees like custodian fees and handling fees (dividends, rights, splits etc). When your broker act as a custodian for your shares (holds your shares on your behalf), you incur the counterparty risk of losing your money in your brokerage account should your broker go bankrupt. The USD in your local broker account does not earn interest. USD held in your US brokerage accounts (E*Trade, Interactive brokers) pay interest. The SIPC( Securities Investor Protection Corporation) insures up to USD500k of equity, including up to USD250k in cash if your US broker goes bankrupt.

Singapore brokers will charge you GST (currently at 7%) taxes on the commission paid. You do not have to pay GST when using US brokers. This is no small sum if your trading frequency is high.

The hassle of using a US-based broker lies in transferring funds to the foreign brokerage account. In this aspect, E*Trade has done a good job. You can write a USD cheque to the E*Trade Singapore office and the funds will be transferred within a few days. No extra charges in the form of telegraphic/cable charges from the bank. One downside is that you have to open a USD current account so that you can get a USD chequebook. The minimum deposit sum is USD1000 for OCBC and DBS. This is a sum of money that you have to leave idling. Take note of the bank fees when transferring money from your US brokerage account back to your Singapore USD bank account (known as inward remittance). Choose the bank that charges the least inward remittance fees or does it for free. As of today, DBS does not charge inward remittance for its USD current account. OCBC used to do it for free in the past but recently started charging for this service. In fact, OCBC even started charging for chequebooks in SGD current accounts when it was free in the past. I shall be closing my OCBC USD current account and open a DBS account soon.

I do not want to sound like a salesman for US brokers. Using local brokers have their advantages. You do not have to deal with the hassles of opening a USD current account and leaving idle money there to meet the minimum deposit requirement. The greatest advantage lies in the favourable currency exchange rate compared to those charged by the banks. When you buy US stocks using a local broker, the currency exchange rate is quite good. If you compare it to that charged by the local banks, the banks are ripping you off. I do not have a solution to this rip-off. I shall be most grateful to anyone who can suggest a cheaper avenue where I can get a favourable exchange rate.

There are important things to note on the tax aspects of investing in US stocks. Taxes on US stocks held by foreigners are subjected to 30% withholding tax. As a foreigner, if your dividends on a particular stock is large enough, it may make sense to sell your holdings the day before it goes Ex-dividend. Then, on the day it goes XD, buy back your stock after it falls at the price to reflect the dividends paid. Due to the hassle and my small US portfolio, I have not tried this. But, I think it makes good sense to go through this hassle if your dividends are large enough to make a difference.

Foreigners are subjected to estate taxes on the amounts in the portfolio exceeding USD60k. It is advisable to create a joint account with your spouse so that she does not take a hit should you leave this world unexpectedly. It is not so much of a concern if your portfolio falls below USD60k. Even then, it will be easier for your spouse to withdraw your money upon your death if the account is a joint account.

I use E*Trade as my US broker. While E*Trade is cheaper compared to local brokers, it is more expensive relative to other US brokers. However, the advantage is that it has a Singapore office and is registered with MAS. If there are problems with the broker, you can just drop by the Singapore office. If you use a US broker with no office here and not registered with MAS, it is harder to get disputes resolved. Emails can be ignored conveniently. I also like the convenient fund transfer facility E*Trade has for its Singaporean customers.

Disclaimer: Due to bad experience on sharing advice regarding money, I wish to state upfront that I shall not be responsible for factual mistakes because I am not paid for sharing these information in the first place. However, correction to factual errors or better suggestions done in a polite manner are most welcome.

101 comments:

  1. Hi,
    I have an account at optionsxpress (has a singapore branch), it has no minimum deposit requirements and money can be i-banked or SGD chequed to them, which they will change at JP morgan institutional SGD/USD Rate after the cheque clears.

    the brokerage fees is also USD 14.99 as compared to etrade's 19.99 for low volume traders.

    hope this helps.

    ReplyDelete
    Replies
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  2. Hi Issac,

    Thank you for the information. OptionsExpress is a better choice than E*Trade for low volume Singaporean traders.

    E*Trade used to have a similar facility with Citibank 2 years ago. The exchange rate charged by Citibank was a total rip-off.

    Based on your experience, would you happen to know how the JP Morgan institutional SGD/USD rate compares with the banks? I will be surprised if small retail investors get to enjoy favorable exchange rates for big financial institutions like JP Morgan.

    Thank you.

    ReplyDelete
  3. actually optionsxpress charges usd 9.99 if u trade 10 times a quarter, whereas e trade will only change you to 9.99 if you trade 30 times a quarter, so even for high vol. traders OX might be a better choice.

    I'm sorry, but I haven't actually funded my OX account yet, since I'm currently waiting for a pullback(interested in GLD,PTR,XOM and BRK.B), so I'm not sure what the exchange rate is.

    Might call them on Monday to ask.

    ReplyDelete
  4. Hi Issac,

    This is useful information. Thanks for it. You seem to have made a good choice in OptionsExpress. Better ask about the exchange rate before transferring a big amount over. It can make quite a difference.

    Actually, for high-volume traders, the best I can find is Interactive Brokers (IB). However, I did not choose them because they do not have a local office in Singapore. IB's commission is the cheapest among all the US brokers. If one day when I get dissatisfied with E*Trade service, IB will be my next choice as US broker.

    By the way, I just went to your blog. Always good to start investing early. I think you will do better than me because you started much younger.

    All the best in your overseas education.

    ReplyDelete
  5. Hi, I am investing in the US market for the long term... XOM, KFT, JNJ, WFC, DOW, COP, GS, GE, BRK.B. I would like to know what the custodian fees like is. Cause POEMS (Phillips Securities) is charging S$24 per counter which is eating into my profits for small holdings of US stocks :(
    Thanks and hope to hear from you brothers soon..... Live long and prosper.

    ReplyDelete
  6. Hi Anonymous at Jan 2, 11:13:00AM,

    There are no custodian fees for US brokers. If you are holding long-term, it is better to use US brokers for buying US stocks.

    ReplyDelete
    Replies
    1. plz do response me at dipuar2006@gmail.com

      Delete
  7. Hi, thanks for the quick reply.

    I had just sent an e-mail on some of the following questions that I have on using E*Trade.

    1. After trading under E*Trade, will the equities will be legally held under my name as a non-US citizen?

    2. As a non-US citizen will my equities are protected under SIPC (Securities Investor Protection Corporation)?

    3. Can I transfer my US holdings under POEMS (Phillips Securities) to E*Trade and what are admin fees involved?

    4. Under E*Trade how would the following matters like dividends, rights, splits be handled?

    Live long and prosper.

    ReplyDelete
  8. 1. After trading under E*Trade, will the equities be legally held under my name as a non-US citizen?

    Yes it is.

    For your assurance under SEC rule- Retail customer assets are segregated from the Broker:

    “The Commission's Customer Protection Rule requires a broker-dealer to segregate customer cash and securities from a broker-dealer's own proprietary assets. More specifically, the rule requires that a broker-dealer keep customer cash and fully paid securities free of lien and in a safe location.”

    http://www.sec.gov/news/press/2008/2008-216.htm

    2. As a non-US citizen will my equities be protected under SIPC (Securities Investor Protection Corporation)?

    E*TRADE Securities accounts are covered by the Securities Investor Protection Corporation (SIPC).

    SIPC is a non-profit membership corporation established by Congress which insures securities and cash held in customer accounts in the event of brokerage bankruptcy. Money Market fund balances are considered to be securities and are included in the SIPC coverage.

    SIPC protects the securities customers of its members for up to $500,000 (including $100,000 for claims for cash). Explanatory brochures are available upon request or by visiting www.sipc.org.

    Securities in E*TRADE FINANCIAL accounts are protected for a total of $150 million, which includes a total coverage on cash of up to $1,000,000.

    Note: Sweep Deposit Accounts are held at E*TRADE Bank, therefore the funds are insured by the FDIC. The coverage for any SDA balance is considered when calculating the total coverage per registration for E*TRADE Bank. The coverage is to at least $250K per account holder as of 31 July 2010 to 31December 2013.
    Excess SIPC Coverage:

    E*TRADE Clearing LLC has purchased from London Insurers additional protection with a firm aggregate limit of $600 million which might not be returned in an SIPC liquidation, and providing that (1) the combined return from the Trustee distributions, SIPC, and London Insurers to any customer does not exceed $150 million, and (2) as a sub-limit, return of cash to any customer by London Insurers does not exceed $900,000. This coverage does not protect against loss of the market value of securities.


    3. Can I transfer my US holdings under POEMS (Phillips Securities) to E*Trade and what are the admin fees involved?

    Yes you can.

    Phillip will charge SGD$53.50 for each counter to be transferred out and ETRADE can reimburse a one off flat fee of USD$100 as long as the value is $5000 or more.

    4. Under E*Trade how would the following matters like dividends, rights, splits be handled?

    Dividends and credited to customers account after three days from payable date or customers can opt for dividend reinvestment program.

    We do not charge any fees for dividends. All corporate actions will be informed by alerts to customer's inbox.

    ReplyDelete
  9. Hi Anonymous at January 3, 2011 9:00:00 PM,

    Thank you for posting the answers from E*Trade. A few other things to note for Singaporeans trading US stocks are;

    1. 30% withholding taxes on dividends
    Dividends on your US stocks will be taxed at 30%. We have no such penalties in Singapore.

    2. US estate taxes

    Again, we have no such penalties in Singapore.

    The last time I heard is that US stocks worth USD60k and above will be subject to estate tax for foreigners. I am not a tax expert, so I shall refrain from commenting more to avoid unintentional misinformation.

    It is recommended to open a joint account with your spouse so that in the event of your unexpected death, she can retrieve your money without suffering a hit from the estate tax.

    ReplyDelete
  10. Again on taxes.

    When using Singapore brokers to buy US stocks, fees charged are subjected to GST tax (currently at 7%). This tax can be avoided by using US brokers.

    I will edit my original post to include these important information on taxes.

    ReplyDelete
  11. 30% withholding taxes on dividends - I know this disadvantage and so I am interested in finding way to avoid the 30% withholding taxes by reinvesting my entire dividend back to the stock which I know most of the US Companies have for their stock holders, like the scrip scheme that the local banks have. In fact BRK don’t give dividends and I like it. Don’t wanna uncle sam to take away my fortune.

    But curious to know, correct me if I am wrong, although we don’t have 30% withholding taxes, the Singapore dividends are given out after the Singapore government had taxed local companies at a tax rate of 15 % to 20 %, while the US government tax both US companies and stockholders at the same rate of 20%?

    Now still asking around how or what is the best and lest expansive way to transfer fund to E*Trade. Don’t wanna have the fat cat bankers share my fortune

    ReplyDelete
  12. Hi Anonymous,

    I think you are right about the tax rates in Singapore. I am sorry I do not know about taxes in US.

    When you have found a cost-effective way to transfer funds to E*Trade, please do share with me. This is a problem that has been bothering me from day one. Thank you.

    ReplyDelete
  13. Hi,

    I also suffer the same heartache when I see Uncle Sam take out 30% of my dividends from my US counters.

    Another painful experience I have is that of the local brokerages biting another significant portion of my dividends. OCBC Securities charges a $10 admin fee (add $0.70 GST to that) on my US dividends that are sent to me. So with my small US counter-size I get dividends every 3 months of about S$50 after-tax. Then OCBC eats $10.70 of that, and I'm left with about $39 after that =(

    Is there any way to make this cheaper? Such as consolidating the frequent dividends into a single large payout?

    Cheers,
    Darren

    ReplyDelete
  14. Hi Darren,

    You may consider using a US broker to eliminate the handling fees by our local brokers. The commission is cheaper and there are no handling fees when you use a US broker.

    ReplyDelete
  15. I have personally encountered the 30% 'ouch' capital gains tax when I filed my IRS tax forms in the past but after living in the US for some time I am taxed as an american. All my dividends are considered qualified dividends which are taxed at a much lower rate.

    Actually I have the best of both worlds. I get the stimulus money from uncle Sam when I file my us taxes and GST offset package from the PAP despite not living in Singapore for more than 10 years. According to the singapore gahmen, I have low income (never file singapore tax), did NS and live in a small HDB flat (parent's place) so I qualify for some money. Maybe more money from the PAP since it is election time.

    Anyway, I suggest you consider zecco or scottrade, their commisions are much lower than etrade.

    ReplyDelete
  16. If you have USD50K in an e*trade securities account, then each trade is USD9.99. There is no volume commission fee. This actually makes it much cheaper than interactive brokers or OptionsExpress if the volume is large. Of course if the order is too large to be fulfilled within a trading day then additional fees may apply.

    Good blog, keep it up.

    ReplyDelete
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    ReplyDelete
  18. Sorry, this may seem like a silly question, but I haven't been able to find a 100% clear-cut answer on any FAQ yet.


    The 30% withholding tax on US Securities apply to DIVIDENDS only, correct ? This 30% tax does not apply to CAPITAL GAINS, correct ? The zero capital gains tax rule in Singapore still applies, correct... assuming you are not an American Citizen & don't need to file taxes with the IRS.

    Thanks and Regards,
    Arthur

    ReplyDelete
  19. Hi Crufty,

    Thank you for your compliment.

    I think for average retail investor like me, high commission arising from large blocks is not a concern to me. Interactive Brokers will still be cheaper as long as penny stocks are not traded. Interactive Brokers charges by the number of stocks. Trading penny stocks can involve large number of stocks even if the dollar amount is not big.

    ReplyDelete
  20. Hi Anonymous (Friday, March 4, 2011 7:38:00 PM),

    Singaporeans are not subjected to capital gains tax when they trade US stocks. I can confirm on this.

    Just make sure you fill up the W-8Ben form properly when you apply for a US brokerage account.

    ReplyDelete
    Replies
    1. For ETFs, there are 3 types of distributions: Dividends, short-term capital gains and long-term capital gains. The first 2 attract 30% withholding taxes while long-term capital gains attract 0% taxes.

      Delete
  21. Hey man,

    Excellent post here, really informative. And thanks to the feedback in the comments section as well.

    I am a Kiwi, a New Zealand citizen and am facing a similar situation. Using the NZ broker here, trying to purchase a U.S. stock induces a transaction fee of $90 (U.S.) or 1.2% - whichever is higher. :O

    And it's per transaction: so, it applies for buying as well as selling.

    So, I understand there are 3 brokers recommended here:
    - etrade
    - interactive brokers
    - optionsxpress

    Thanks guys,
    Yash

    ReplyDelete
  22. Hi Yash,

    E*Trade and OptionsXpress are recommended in Singapore because they have a local office. You may want to give preference to US brokers who have a local office in New Zealand. It is easier to settle disputes or get help when you have local support.

    I am quite shocked by the rates charged by your NZ broker for US stocks. May I know how much are the commission charged by NZ broker for buying NZ stocks?

    ReplyDelete
    Replies
    1. Hi Hyom,

      Sorry, just saw your reply (after 2 years haha). Brokerage fees are 30$ per transaction - so, for buying and for selling, it is $30 each.

      Yash

      Delete
  23. Hi People,

    Thanks for the Excellent info posted by y all esp Hyom. Can any1 pls confirm that i can open an OX/ETRADE trading account despite already having a local Singapore brokerage account.

    Also, can any1 share a few good stocks from US market. I have kept an eye on Bank Of America, CitiGroup, General Maritime, Intel. Shall appreciate your feedback...

    Thanks,

    Aj

    ReplyDelete
  24. Hi All,

    This is great. Was searching for a good US broker in SG and contemplating whether to go with E*Trade. Am convinced by this blog to open an account with them. Thank you! Keep up the good work.

    Am still unclear about the estate duty tax for amt > USD60K. Can anyone validate & confirm this? This question also set me thinking what will happen to my account upon my death. Can my family close the account and draw out the money in the E*Trade account? Any input?

    ReplyDelete
  25. Hi Hyom,

    Do you happen to know anything or suggest other websites that discuss about tax for non Singaporean who trades US stocks through brokers in Singapore (such as eTrade)?

    Many thanks

    Vocus

    ReplyDelete
  26. Hi Vocus,

    I am sorry I do not know much in this area to be of help.

    ReplyDelete
  27. excellent blog! I am a Singaporean using POEMS now and am quite fed up with the way they charge commission and handling fees. I am thinking of switching to a USA broker, because I want to try short-selling US stocks. Do any of you have experience shorting with OX / Etrade / other USA brokers with offices in Sg?

    ReplyDelete
  28. Hi ophio81,

    I am sorry I have no experience shorting stocks with any broker. However, if you want to trade US stocks, using a US broker will be preferable to a Singapore broker. It is cheaper and better.

    ReplyDelete
  29. Quote:"Based on your experience, would you happen to know how the JP Morgan institutional SGD/USD rate compares with the banks? I will be surprised if small retail investors get to enjoy favorable exchange rates for big financial institutions like JP Morgan."

    I've been following this blog for months now.

    ^Just curious, has anyone found a way to circumvent the problem of unfavorable exchange rates if we were to use a US brokerage instead of a local brokerage?

    ~Charlie

    ReplyDelete
  30. For withdrawing of USD funds, one possible way is to telegraphic transfer is from your brokerage to a local brokerage, usually at a cost of USD$20-30.

    I have not tried it yet though, but both Phillip Securities and OptionsXpress point-of-contacts told me it can be done!

    So I will be planning to do it soon - to transfer money from OX to Phillip.

    ReplyDelete
  31. OptionsXpress is using JP Morgan as their bank.
    See here: https://online.optionsxpress.com.sg/..._internet.aspx

    JP Morgan is responsible for the loss of MF Global's US customer funds. They are the bank holding MF Global's segregated customer funds.

    If you haven't understood the magnitude of MF Global's loss of customer funds, then be prepared to be MF-ed by your broker and don't complain when your funds AND open positions are ALL FROZEN while the market is still moving causing you total loss of your account.

    ReplyDelete
  32. Hi Hyom,

    Do you know where we can obtain the JP Morgan Institutional FX rate?

    I tried finding it online but was unsuccessful.

    Thanks and have a happy new year.

    ReplyDelete
  33. Hi Kevin,

    I think the FX rate you mentioned is not available to retail investors. The word "Institutional" suggests that it is available only for the bigger financial institutions.

    ReplyDelete
  34. Hi Hyom,

    How do you deposit USD with Etrade? I called them up and they say if conversion is done through them they would be used Standard Chartered bank rates. Such rates aren't competitive at all. Are they better ways to convert SGD to USD?

    Thanks!

    ReplyDelete
  35. Hi Edward,

    Getting good exchange rates is a problem that has vexed me since day one. I am sorry I do not know the answer. If you know, please share it with me.

    ReplyDelete
  36. Hey Hyom,

    Was searching for US brokers on google and found your site. Great site btw!

    Just wanted to know. When you invest overseas, do you employ any techniques to deal with or manage foreign currency risk?

    If US becomes the next Japan there could be problems with US investments.

    thanks and happy new year!

    ReplyDelete
  37. Beware of your E*Trade recommendation, it's a market maker and there have been many complaints.

    http://www.consumeraffairs.com/finance/etrade.html

    ReplyDelete
  38. Hi

    Someone from Etrade singapore told me that we can't invest in US mutual funds because we are singaporeans. I find this very strange. Does anybody knows the truth?

    Interactive brokers offer US mutual funds with no front / back end load.

    http://www.interactivebrokers.com/en/p.php?f=products&p=mf

    ReplyDelete
  39. Hi everyone,

    Its a very informative blog for newbies like me, great effort.I have a question, I trade commodities from singapore using US broker on an intra day basis, do commodities have the same estate tax and capital gains tax as the stocks? Commodities dont have any dividends, how do the profits made on day trading be considered as?

    ReplyDelete
  40. E*TRADE sucks. I have to fax or mail to US a letter to withdraw money, even though the wire in account is the same account I wire out the money to them. And they'll 25 USD AND 2.5% of the withdrawal amount.

    ReplyDelete
    Replies
    1. And I mean they'll charge 25 USD AND 2.5% of the withdrawal amount.

      Delete
  41. Evidence of profitability in the form of a dividend check can help investors sleep easily. Profits on paper say one thing about a company's prospects.

    best dividend stocks australia

    ReplyDelete
  42. OX gives a favourable rate for transfer from SGD to USD. I got a rate of 1.249 for a 7Aug2012 transfer.
    For OX, Stock trades are US$14.95 for less than 9 trades or US$9.95 for 9 trades and above per quarter, and Options US$12.95 for less than 11 contracts, or US$1.25 for 11 contracts and above.
    I can refer you to open an OX account and get $100 funded into your account once you start trading, need your email to sent you the details, and how to get the $100.
    Take a look at my options selection. http://gainmassivecash.com/blog
    Disclaimer: Trade at your own risk!

    ReplyDelete
  43. how do you transfer the money to your account? lol what's wire transfer, is there more convenient way like DBS ibanking xfer?

    ReplyDelete
  44. I suppose the international banks like Citibank, HSBC, Std Chart allows internet banking to the account like OX. As for local banks, you need to send the cheque to the local office as no internet banking to a foreign bank for escrow since this is for the 3rd party mgmt of your money. Wire transfer is the fastest and cheapest as well.

    ReplyDelete
  45. Hi,
    there is one more US brokerage with their office in Singapore since 2011:
    https://www.thinkorswim.com.sg/tos/client/index.jsp

    How do u rate this borkerage house? Do you know whether it is better than E*trade, OX or not? I am a beginner in US trading using US brokerages

    ReplyDelete
    Replies
    1. I recently opened a ThinkorSwim (TOS) account in Singapore but am now looking at ways to transfer my life savings out. A few major bad encounters since opening my account. The last straw came when I saw evidence of how my friend's TOS account was compromised but the TOS refused to take responsibility and blamed that it was unfortunate.

      How safe is your money ? ThinkorSwim will tell you they're registered under MAS. And if like most Singaporeans who think the government & MAS will protect you for everything, you'll be in for a surprise ! MAS will only be interested in matters that may raise issues of supervisory concern. They will not resolve commercial disputes between you and your financial institution or order the financial institution to pay compensation to you. MAS will direct you to FidREC, who is a limited liability company. Read http://sbr.com.sg/financial-services/commentary/fidrec-fair

      What about SIPC which protects you for your investments up to US$500k if the brokerage goes broke (eg. MF Global) ? ? First of all, it's based in US. Secondly, it's still based in the US. Thirdly, it's based in the US. Do I want to fly to US and wait for months & years for a dispute to be resolved ?

      To save pennies in commissions and lose sleep. Not worth the risk !!! I think it's more important to park my funds with an institution that is built on trust and integrity. I finally figured why they're called "Think" or "Swim" ! I wished I had thought about it more thoroughly earlier. I wish there is a brokerage called "Invest&Sleep".

      Delete
    2. It is pretty obvious this Anonymous post is made by a competitor and probably works for one of the Singapore brokers. Singapore brokers are extremely uncompetitive in their fees compared to their US counterparts. This anonymous person claims that he is trying to transfer his life savings out. This is strange. It is very easy to transfer your life savings. Secondly, he talks about account being compromised but does not describe how. If you want to smear someone's reputation, please provide evidence. If you want to be anonymous, at least provide facts that can be verified.

      Delete
  46. you can compare the various US broker rates over here:

    http://newayenterprises.com/gainmassivecash/blog/?p=371

    It also has a comparison of the pros and cons :

    http://gainmassivecash.com/blog/?p=371

    ReplyDelete
  47. Setting up your FREE Rate Watch service
    Simply input your full name, contact details (Mobile Telephone Number & Email Address), the type of alert that you would like to receive (Email, SMS or Both), the regularity of your rate updates (Daily*, Weekly, Fortnightly or Monthly), the day of the week you would like the update on (except if you select daily), the time period for which you would like the alert to run (from and to dates), the currency that you wish to be updated on and a ‘desired’ rate (if you have one).

    Bureau De Change | Travel Money

    ReplyDelete
  48. Hi Edi,

    I have not used ThinkorSwim Singapore before. So, I cannot give informed views.

    Please check whether GST is charged on commissions when you use ThinkorSwim Singapore. If it is registered in Singapore, then GST will be charged. 7% is no small amount.

    ReplyDelete
  49. Quick question re US investing and the 30% witholding on dividends.

    Do you pay the 30% on the SGEX listed iShares S&P500 etf? I am in HK and currently hold similar (VTI etf in US) but pay the 30%. If the Sing version wasn't subject to it, I could theoretically buy the Sing version and stop losing a third of my dividends.

    ReplyDelete
  50. Quick question. How do we get back the 30% withholding tax on dividends from US stock? We are not US citizens, surely the tax can be refunded?

    ReplyDelete
  51. looks like no one has been successful in claimning back the 30% tax if u r based in Singapore?
    Right?

    ReplyDelete
  52. Hi,

    It's my first time to read this blog and I want thank hyom for sharing it to us.

    Am planning of investing in ETFs soon. Is it advisable to use the recommended US brokers above for ETFs such as the iShares ETF?

    And this might be off topic, would any one still recommend on bond ETFs or bond mutual funds now? Since the rates now are too low, doesn't it follow the the price of bonds are on the high side.

    Been looking for answers in the net but can't find any answers.

    Hope you guys can enlighten me.. thanks.

    ReplyDelete
  53. Hi hyom,

    Is your recommendation of using E-trade still hold?
    Or OX is a better choice now?

    Rgds.

    ReplyDelete
  54. Or thinkorswim is better? (among E-T, OX and tos, which is better for now?)

    Am still unclear about the estate duty tax for amt > USD60K. Can anyone validate & confirm this? This question also set me thinking what will happen to my account upon my death. Can my family close the account and draw out the money in the E*Trade account? Any input?

    When I sell a US share position that >USD60K via E-T, OX or tos, (sure I mean I still alive), how is that money come back to me? Any estate duty tax then for the >USD60K, if my gain is says USD15K (assuming I bought the share at USD50K and to sell at USD65K when its share price gone up)?

    Hope for your expert views...as I am considering to buy a US share counter in 1 trade of USD60K based on current price. I don't trade, but just buy and hold.

    ReplyDelete
  55. Hi guys,
    Thank you for the very informative article.
    I would like to ask if Singapore residents need to pay singapore tax (i.e. declare with IRAS as other income) when receiving Dividends from US stocks in the US brokerage account?
    As somebody pointed out we dont have to pay singapore tax for capital gain.
    Thanks for the great info

    ReplyDelete
  56. I really like sharebuilder. The trades are just 4 dollars on any amount.

    ReplyDelete
  57. Thank you very much for posting this article. Its a very useful article. We will be acquire lot of things from this site.So i want some information about this post.

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  58. some Questions. Really appreciate quick answers cos I want to open a US brokerage account soon

    1) Can anyone confirmed which is better.
    OptionExpress (OX) or ETrade? Less complaints, more reliable, w/o charging on the withdrawal amount?

    2) There is mention of 25 USD charge AND 2.5% of the withdrawal amount by Etrade, is that true?
    What's the charge like for OX?

    3) Do OX and Etrade offer real time quotes for OTC counters? I assume they have to offer real-time quotes for NASDAQ and NYSE!

    4) Can I trade directly on OTC counters via internet? Cos I know for POEMS, you cannot buy thru internet, or even thru their brokers.


    5) Can anyone confirm on the estate duty tax and withholding taxes?

    Thanks a lot

    ReplyDelete
    Replies
    1. I think Etrade charges 25 USD per withdrawal but they do not charge 2.5% of the withdrawal amount. OX charges 30 USD per withdrawal.

      Delete
  59. Its really a great post. I am sure that anyone would like to visit it again and again. After reading this post I got some very unique information which are really very helpful for anyone. This is a post having some crucial information. I wish that in future such posting should go on.

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  60. I wanted to thank you for this great read!! I definitely enjoying every little bit of
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  61. You can always take a turn and check ioptionsreview.com ioption broker review sites to see how the US stock market is moving and you may even find a lists of good broker site you can deal with when trading US stocks. Goodluck with your trade and by the way all your posts are really really helpful!

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  62. The excellency of your post compelled me to give a comment. Your post is awesome. Keep up the good work. We are always here to support you.

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  63. Looks like there is no one who manage to claim back the 30% withholding tax.

    OX sucks, as they simply don't answer the queries, and ignore it totally.

    ReplyDelete
  64. I did a little research and comparison:

    1) OptionsXpress charges US$15/1000 shares. I suppose it's ok if I'm buying a few shares from an expensive stock like Google.
    2) ThinkorSwim has a flat fee option at US$9.95/trade. However, downside seems to be the high wire transfee and GST.
    3) Local broker Phillip Securities (POEM) just launched a promotion for US$8.80 til end Feb which will revert to US$20 thereafter.

    Any comments or views ?

    ReplyDelete
    Replies
    1. Have you consider Interactive Brokers (IB), which is probably the cheapest rate at $1/share or contract. They need a min of $5k in the account though

      Delete
  65. Does anyone have experience with Dividend Reinvestment for US stocks? ie. automatically use the cash dividend received to buy more shares (of the same stock) instead of having to incur additional charges...

    ReplyDelete
  66. Wow! Read through this entire chain! I am Indian PR living in Singapore and recently traded my company stock options and have 60KUSD in my E-trade account. I have no clue now how to transfer it to India NRE account or to Singapore; what is better, what mode to use, tax implications and how to get the best exchange rate! Got some info from some of the answers here but need to do a lot more research before I can proceed! Any ideas?

    ReplyDelete
  67. Singapore brokers’ proposal seems to be very attractive taking into consideration interest rates and the possibility to save money on taxes. But one should always check with your licensed financial advisor and tax advisor to determine the suitability of any investment before making your final decision. Definitely, loan brokers in Singapore are gaining their good reputation, but still there are such services like online payday loans which are also fast and reliable.

    ReplyDelete
  68. I saw a reply above that says ”short term capital gain is taxed at 30%”, that does not seem right. I believe both short and long term capital gain is not taxed if you are a Singaporean. CAN someone please confirm this????

    Also I used OptionExpress, E-trade, Interactive Brocker, and Think or Swim. So here is my advice.
    E-trade will be best for most peolpe(not too expensive and very easy to use).
    IB- is more for professionals, it's the cheapest, but not user friendly at all with high learning curve.
    TOS- for higher frequency traders that use technical analysis to trade. Very good platform and auto trade build in, I decided to use this after I tried 4 brokers.
    OptionExpress- has more option related trading, but E-trade or TOS can do the same. Do not recommend and commiosn is also higher.

    ReplyDelete
    Replies
    1. Hi joe,

      There is no capital gains tax for Singaporeans. However, there is a 30% withdrawal tax on dividends.

      Delete
    2. Hi Joe,

      SG IRAS will not tax you for capital or dividends gains but US government will tax you both. You need to fill in the W-8BEN form from your broker if you've not done so to avoid capital gains tax. Dividends tax @ 30% is unavoidable.

      Regards TOS recommendation, you might want to re"Think" again as the reply post to Edi suggested.

      Delete
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  71. Hi all,

    Thanks for the useful blog and comments! I just came across what seems to be a new way to do SGD/USD money transfers without getting ripped off by the banks:

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    Although I haven't actually tried it out yet... Maybe one of you can try it and tell us how it goes.

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  75. Hi i notice E*Trade debt levels are very high ? What are the risks if the company goes bust and what should traders be aware when trading using the company ?
    Compared to other brokers their debt levels are very high any advise how to protect yourself if the company or interest rates rise as they will have to service their loans with higher borrowing rates.
    Thanks
    Augustine Dsilva

    ReplyDelete
  76. Etrade did not accept my friend open New Account.
    Say's they are not accepting new customers…
    Anyone knows what's boiling???

    ReplyDelete
    Replies
    1. Same here. I may go for Saxo Capital. Anyone can share their thoughts on Saxo ?? Thanks

      Delete
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