Finally ready to start investing in Singapore? Congratulations! That’s great news because if you’re seriously considering investing that means you’re also serious about achieving your financial freedom. We couldn’t be more ecstatic and happier for you! But at last, where should you start?
Your first step to investments is opening up a brokerage account in Singapore. This process is fairly easy and nothing you should be intimidated about but we understand why it can be intimidating. Therefore, we’re here to guide you.
Without further ado, let’s begin!
There are basically two accounts that you need before you can start trading. The first account is your CDP account. Similarly done in Malaysia, CDP stands for Central Depository System and is operated by the Singapore Exchange (SGX).
But how does the CDP account functions? Basically, this is the account that will safeguard all your share holdings. Indeed, any share you buy will be automatically deposited here and CDP also keeps track of your transaction history – whether you buy or sell your shares. Unlike brokerage accounts, however, individuals can only hold one direct personal account with CDP.
The CDP account also has no direct link with brokerage firms. In other words, the shares you buy with any brokerage account will go directly to the CDP account.
For you to open a CDP account, you need to be at least eighteen years of age and not be an undischarged bankrupt. You are also required to have an existing savings or current bank account with one of the following banks – Citibank, DBS/POSB, HSBC, Maybank, OCBC, Standard Chartered Bank, UOB.
Singaporeans can either apply for the account online directly with CDP via Customer Service Counters, or by opening a sub-account with brokerage firms.
But wait! How can you differentiate a CPD account from a custodian account?
A CDP account allows you to be the sole owner of your shares. Hence, you are given certain privileges such as voting rights and the right to attend AGMs.
On the other hand, the custodian account doesn’t give you the same privileges. Any shares deposited into a custodian account would not be under your name but instead the brokerage firm of your choice. As a result, this allows you more privacy since they are shielding your identity for you.
To simplify, a CPD account gives you more control whereas a custodian account provides more freedom!
There are currently four brokerage firms in Singapore that offers custodian accounts. The brokerage firms includes Citibank Brokerage, Standard Chartered, SAXO Markets, and also iFAST Financial.
The next account that you need is a brokerage or trading account.
Singapore has a lot of brokerage firms but how do you go around looking for the right one? For one, the major thing you should look out for when you’re browsing for brokerage firms is the broker’s commission fee. Why? Because the commission fee will be charged with each and every trade you make.
Choosing a brokerage firm based on their commission fees isn’t just about looking for the cheapest one. It also depends on two situations – how often you buy and sell, and how much you want to invest.
For example, if you intend to buy and sell frequently, then choose a brokerage firm with lower commission fees. In this case, you can take a look at Seedly’s lists of brokerage firms in Singapore as well as the fees they are charging.
The list is also separated into the three most common trading methods in Singapore – online trading, broker-assisted trading and cash up front.
|Brokerages Firm||Minimum Fees||Trading Fees (based on contract amount)(S$)|
|<$50K||$50K to $100K||$100K|
|Stock Holding: CDP|
|KGI Securities(formerly AmFraser)||$25||0.275%||0.22%||0.18%|
|Maybank Kim Eng||$25||0.275%||0.22%||0.18%|
|Lim & Tan Securities||$25||0.28%||0.22%||0.18%|
|Phillips Securities (Poems)||$25||0.28%||0.22%||0.18%|
|RHB Securities(formerly DMG)||$25||0.275%||0.22%||0.18%|
|Stock Holding: Custodian|
|Saxo Capital Markets||$9-$15||0.10% to 0.12%||0.10% to 0.12%||0.10% to 0.12%|
|Brokerages(Broker Assisted)||Minimum Fees||Trading Fees (based on contract amount)(S$)|
|<$50K||$50K to $100K||>$100K|
|KGI Securities(formerly AmFraser)||$40||0.50%||0.40%||0.25%|
|Maybank Kim Eng||$40||0.50%||0.40%||0.25%|
|Lim & Tan Securities||$40||0.50%||0.40%||0.25%|
|Phillips Securities (Poems)||$40||0.50%||0.40%||0.25%|
|RHB Securities(formerly DMG)||$40||0.50%||0.40%||0.25%|
|Stock Brokerage(Cash Upfront)||Minimum Fees||Trading Fees|
|Maybank Kim Eng||$10||0.18%|
|Phillips Securities(Poems)||$10(till 30 June 2018)||0.12%(till 30 June 2018)|
You also need to consider how much you want to invest. A minimum commission fee will be charged regardless of how often you will make trade. Therefore, do take note of this if you’re a small time investor.
Aside from commission charges, there are several other factors you should also consider when choosing a brokerage account in Singapore. For instance, fund transfers and overseas investments.
First of all, the fund transfers. It’s important you look into fund transfers when you’re choosing a brokerage firm. Why? Because you need to consider how you would want the payment method to be. For example, opening a brokerage firm with a bank that you’re familiar with is more convenient. This is because you can automatically pay your shares with the money in the savings account. You can also choose to pay for your stocks through other methods such as Automatic Teller Machines (ATMs) or through GIRO.
Another important factor to opening your brokerage account in Singapore is overseas investments. As you become more experienced, you may also want to dip your toes into investing in overseas markets. If that is the case, then you should consider using a broker that allows you to invest in some of the major overseas stock markets. Moreover, not only will this save you the hassle of opening up another brokerage account, it also gives you the ability to monitor your investments on a single platform. Thus, they are very convenient and easy.
That is our complete guide to opening a brokerage account in Singapore. We hope our guidelines proves useful for you thus we wish you good luck on your journey to wealth preservation! Of course, feel free to check out the rest of our articles on investments here if you’re curious!
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