Despite the volatility in the financial markets after the COVID-19 pandemic, more people have dived into investing. Today more investors are putting their money into stocks, according to UOB study. Singapore has witnessed an increase in interest in investment as well.
Rather than having your cash lay around and erode due to inflation, investing can reduce the opportunity cost and grow your wealth. Read on to learn how to choose the best brokerage account in Singapore.
What Is an Online Brokerage?
An online brokerage account is a type of investment account on the internet that allows you to buy and sell various investments, such as mutual funds, bonds, stocks, and ETFs. It provides access to investment tools, strategies, and research to aid in making informed investment decisions.
When you set up a brokerage account with a licensed brokerage firm, you can deposit funds and place investment orders in assets like stocks, bonds, and mutual funds. The brokerage firm takes care of handling all investment details, including executing trades and providing investment reports.
What is a CDP Account?
CDP (Central Depository) accounts act as a bank for your purchased shares. When you buy stocks through a brokerage, the shares are stored in your CDP account, ensuring the safekeeping and facilitating the clearance and settlement of these securities.
CDP-Linked and Custodian Accounts
CDP-Linked Accounts
As the name suggests, a CDP-Linked account is a brokerage account directly linked to your Central Depository (CDP) account. Now, why is this important?
With a CDP-Linked account, whenever you purchase shares or securities, they are automatically deposited into your CDP account. This connection creates a streamlined process, removing the need for any manual transfer of shares between your brokerage and CDP accounts.
The Pros
- Streamlines trading by automatically transferring purchased securities to your CDP account, ensuring faster transactions.
- Provides a single view of all your investments, simplifying portfolio management.
- Offers enhanced security by ensuring immediate transfer of securities to your CDP account.
The Cons
- Some brokerages might charge you higher fees for transactions through CDP-Linked accounts, which can accumulate if you’re an active trader.
- Transactions in a CDP-Linked account are recorded under your name, removing the layer of anonymity that some investors may prefer.
Custodian Accounts
A custodian account is an investment account in which a brokerage or a bank keeps and safeguards an investor’s securities. Quite similar to a CDP account, you might think. However, the primary difference lies in who holds your securities.
In a custodian account, the custodian firm, typically a bank or brokerage, holds the securities on your behalf. This is a common setup when dealing with online or discount brokerages. They keep your securities in a pooled account, and it’s their job to handle the administrative tasks associated with your investments, such as collecting dividends and interest, providing corporate action information, and handling settlements.
The Pros
- Custodian accounts usually come with lower fees as brokerages can batch transactions together, thereby reducing overall costs.
- Brokerages handle all administrative tasks associated with your investments.
- Many custodian accounts give you access to a broader range of global markets, which might not be accessible with a traditional CDP account.
The Cons
- Since securities are held in a pooled account, transferring them out can be time-consuming if you decide to switch brokers.
- Since the custodian firm holds the securities on your behalf, you might feel you have less direct control over your investments.
- In the unlikely event that your custodian firm goes insolvent, some risk might be involved.
Fees and Charges for Brokerage Accounts
Let’s delve into the topic of fees and charges associated with both CDP and Custodian accounts.
CDP Accounts
CDP accounts typically involve a variety of fees:
- Clearing fee: A percentage of your transaction value, capped at a certain amount.
- Trading fee: A fixed percentage of your transaction.
- Quarterly maintenance fee: Charged to keep the account open; varies based on the brokerage and securities traded.
Custodian Accounts
Custodian accounts usually have lower transaction fees due to their structure. However, they can come with other fees:
- Dividend handling and corporate action fees, managed by the custodian firm.
- Quarterly custodian fee may be charged by some custodian brokerages, varying among different brokers.
Tips for Selecting a Brokerage Account that Fits Your Needs
Here are some handy tips to guide your decision-making process when choosing a brokerage account:
- Understand Your Needs: Your specific needs will determine the kind of brokerage you choose.
- Compare Fees and Costs: Some might charge commission fees, while others may have spread or custody fees.
- Consider the Available Securities:Some might provide a wide range of stocks, ETFs, and bonds, while others might be limited.
- Ease of Use: Some brokerages offer intuitive platforms with easy navigation and access to necessary tools.
- Customer Service:Look for broker that offers robust customer support via chat, email, or phone.
- Research and Educational Resources: Good brokers provide access to quality research materials, trading tools, and educational resources to help you make informed decisions.
- Security: Ensure that the relevant authorities regulate the broker and have measures to protect your data and funds.
- Trading Costs: These include commissions, spreads, and other transaction-related fees. Always compare the cost structures of different brokerages before making a decision.
Top Recommended Brokerage Accounts
| Online Brokerage Firms | Minimum Funding | Trading Fees | Best for |
| DBS Vickers | S$1,000 | 0.28% | Best for Extensive Research and Market Analysis |
| OCBC Securities | S$1,000 | 0.275% | Best for Diverse Investment Options |
| UOB Kay Hian | S$1,000 | 0.275% | Best for Comprehensive Research and Advanced Trading Tools |
| Philip Securities (POEMS) | S$1,000 | 0.28% | Best for Technological Innovation and Diverse Product Offering |
| Saxo Capital Markets | S$3,000 | 0.08% | Best for Access to International Markets |
| Interactive Brokers | S$2,000 | 0.08% | Best for Low-Cost trading |
| Tiger Brokers | N/A | 0.08% | Best for user-friendly interface and competitive pricing. |
| FSMOne | N/A | 0.08% | Best for Fund Investments and Diverse Portfolio |
| CGS-CIMB Securities | S$1,000 | 0.18% | Best for Robust Research and Analysis Tools |
1. DBS Vickers – Best for Extensive Research and Market Analysis
DBS Vickers, a premier brokerage in Singapore, is recognized for its user-friendly trading platform and rich resources for market research on financial markets. As a part of DBS Bank, it presents the benefit of effortless integration with DBS banking services, enabling swift transactions. Its strength lies in providing in-depth stock market analysis, making it a favored choice for newcomers and experienced traders in the investment landscape. DBS.
- Why You Should Consider: DBS Vickers should be your go-to if you’re a keen market analyst. It stands out for its excellent research and market analysis, providing investors with insightful reports and data to make informed investment decisions.
- Minimum Funding: To start trading with DBS Vickers, you must have a minimum initial deposit, which varies depending on the account type.
- Trading Fees:
- SGX Trades – 0.28% commission
- Online Trades – S$25
- Type: You can go with either a Custodian or a CDP account.
2. OCBC Securities – Best for Diverse Investment Options
OCBC Securities is a subsidiary of the OCBC Group and one of Singapore’s leading securities and futures brokerage firms. It offers various financial services, including securities trading, futures trading, foreign exchange, and more.
- Why You Should Consider: OCBC Securities, allows you can access a broad range of securities, including stocks, ETFs, REITs, bonds, and more. This makes it a perfect choice for investors looking for diverse investment options.
- Minimum Funding: Requires a minimum initial deposit of S$1,000.
- Trading Fees: 0.275% minimum commission fee for online trades on the SGX, with a minimum charge of S$25.
- Type: Custodian and CDP account options.
3. UOB Kay Hian – Best for Comprehensive Research and Advanced Trading Tools
UOB Kay Hian is the brokerage arm of United Overseas Bank (UOB) and one of the largest securities firms in Asia. They offer various services, including stock trading, futures trading, and margin trading.
- Why You Should Consider: Investors gain access to comprehensive research and advanced trading tools, making it an excellent choice for those who want to make data-driven decisions.
- Minimum Funding: Minimum initial deposit of S$1,000.
- Trading Fees: Charges a commission of 0.275% for online trades on the SGX, with a minimum fee of S$25.
- Type: Custodian and CDP accounts.
4. Philip Securities (POEMS) – Best for Technological Innovation and Diverse Product Offering
Phillip Securities, the pioneering force behind online trading in Singapore through its platform POEMS (Phillip’s Online Electronic Mart System), is a member of the PhillipCapital Group. They offer extensive financial services, including securities trading, futures trading, unit trusts, insurance, and more.
- Why You Should Consider: Innovative technology, diverse product offering, and excellent customer service
- Minimum Funding: Minimum initial deposit of S$1,000.
- Trading Fees: Commission of 0.28% for online trades on the SGX, with a minimum fee of S$25.
- Type: Custodian and CDP accounts.
5. Saxo Capital Markets – Best for Access to International Markets
Saxo Capital Markets, a subsidiary of Saxo Bank, is a leading digital brokerage firm known for its global reach. They offer extensive financial services, including securities trading, forex trading, contract for difference (CFD) trading, and more.
- Why You Should Consider: Go-to choice if you’re an investor looking to expand your portfolio internationally. They offer access to over 30 international markets and investment products.
- Minimum Funding: Minimum initial deposit id S$3,000.
- Trading Fees: Commission starts at 0.08% with a minimum charge of S$5.
- Type: Custodian account.
6. Interactive Brokers – Best for Low-Cost Trading
Interactive Brokers is a U.S-based brokerage firm renowned globally for its technologically advanced trading platform and competitive pricing. They offer various financial services, including securities trading, forex trading, CFD trading, and more.
- Why You Should Consider: Cost-conscious investors looking for low-cost trading opportunities.
- Minimum Funding: Minimum initial deposit of S$2,000.
- Trading Fees: Charges a maximum of 0.08% commission for trades on the SGX, with a minimum fee of S$2.50.
- Type: Custodian account structure.
7. Tiger Brokers – Best for User-Friendly Interface and Competitive Pricing
Tiger Brokers, a Singapore-based online brokerage, is part of the US-listed UP Fintech Holding Limited. It offers a comprehensive suite of financial services, such as securities trading, futures trading, and more.
- Why You Should Consider: Ideal for investors seeking a seamless, user-friendly trading experience. With a sleek interface and intuitive design, it simplifies trading processes significantly.
- Minimum Funding: No minimum deposit requirement.
- Trading Fees: A commission rate as low as 0.08% for online trades on the SGX, and the minimum fee is S$2.88.
- Type: Custodian account structure.
8. FSMOne – Best for Fund Investments and Diverse Portfolio Building
FSMOne is an online trading platform operated by Fundsupermart.com, a division of iFAST Financial, a Singapore-based investment products distributor. They offer various services, including securities trading, mutual funds, bonds, and ETFs.
- Why You Should Consider: Perfect for investors looking to diversify their portfolios with mutual funds and other investment products.
- Minimum Funding: No minimum deposit requirement.
- Trading Fees: 0.08% or a minimum of S$10 for online trades on the SGX.
- Type: Custodian account structure.
9. CGS-CIMB Securities – Best for Robust Research and Analysis Tools
CGS-CIMB Securities is a Singapore-based brokerage firm joint venture between China Galaxy Securities Co. Ltd and CIMB Group Sdn Bhd. They offer comprehensive financial services, including securities trading, and futures trading.
- Why You Should Consider: Excellent choice for investors who rely heavily on research and analysis tools for investment decisions.
- Minimum Funding: Minimum initial deposit of S$1,000.
- Trading Fees: Charges a commission of 0.18% or a minimum of S$18 for online trades on the SGX.
- Type: CDP and Custodian accounts.
How to Start Investing with an Online Brokerage?
Here are the steps to follow when starting to invest in a online brokerage.
Step 1: Identify Your Financial Goals and Risk Tolerance
Before you start investing, identify your financial objectives. Additionally, assess your risk tolerance. All investments come with some risk, and investing in a way that aligns with your comfort level is crucial.
Step 2: Choose an Online Brokerage
Based on your investment goals and risk tolerance, choose an online brokerage that fits your needs. Consider factors like the brokerage’s reputation, available investment options, platform usability, customer service, and fees and charges.
Step 3: Open a Brokerage Account
Once you choose a broker, you must open an account. This process typically involves filling out an application form with personal information, including your identification details, employment status, and financial information.
Step 4: Deposit Funds
After setting up your account, you must deposit funds to start investing. The brokerage will provide instructions on how to transfer money into your account.
Step 5: Start Trading
Now that you have a funded account, you can start trading. Most brokerages offer a range of investments, from stocks and bonds to mutual funds and ETFs. Conduct thorough research or seek professional advice before making any investment decisions.
Step 6: Monitor Your Investments
Keep an eye on your investments, adjusting as necessary. This doesn’t mean you should react to every market fluctuation, but you should be aware of your investment performance and make changes in line with your investment goals and risk tolerance.
Why Should You Diversify Your Portfolio?
Diversifying your investment portfolio is vital for mitigating risk and potentially increasing returns. By spreading investments across various assets and sectors, you avoid concentrating risk in one area and can counterbalance poor-performing investments with those performing well. Diversification also encourages balanced investing, offering exposure to various growth potentials, thus preserving capital and smoothing out investment volatility..
Closing
Choosing the best online brokerage in Singapore for 2023 depends on your needs and investment goals. The 9 brokerages discussed in this guide each offer distinct advantages catering to various investor types. Whether you’re seeking low fees, robust research tools, different asset classes, or excellent customer service, a brokerage on this list perfectly suits your requirements.
Key Takeaways
- Choose the best online brokerage in Singapore based on individual needs, such as fees, research tools, asset availability, and customer service.
- Start investing with an online brokerage by identifying financial goals, opening an account, depositing funds, and monitoring investments regularly.
- Diversification reduces risk and increases potential returns by spreading investments across various assets and sectors.
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