Trading Platforms: Are you a Winner or a Loser?
One of the most important rule in personal investing is to keep your costs as low as possible. Remember: in personal finance, you get what you DON'T pay for!
Are you losing money on your trades?
It’s highly likely that the answer to that question is - unfortunately - yes.
In that newsletter, I am going to help you navigate the costs associated to all the trading platforms available in Singapore, and help you decipher if you are a Winner or a Loser.
In one of my previous newsletter, I talked about the Robo-Advisors available in Singapore, as well as their associated fees for some of them. So I’m not going to cover them again in here, but bear in mind that their cost is really high.
However, I went through a thorough analysis of all the trading platforms available out there. You are definitely using these platforms, and before we jump into the topic in detail, once again, beware I’m not going to be nice for any of these trading platforms, except for one and only one.
What are these trading platforms and what are their fees?
In total, I have analysed the fees of 12 different trading platforms (also with the courtesy of Dollars and Sense) as follows:
Note: All prices are listed in SGD.
^ Citibank Brokerages charges a custodian fee of 0.0165% of your monthly average stockholding balance, payable every six months.
^^ Phillip Securities charges a commission rate based on our previous day’s settled asset value. For those with $0 to $29,999 in assets, the brokerage rate is 0.12% (min $10); for those with $30,000 to 249,999 in assets, the brokerage rate is 0.10% (min $10); for those with over $250,000 in assets, the brokerage rate is 0.08% (min $8).
^^^ HSBC charges HSBC Premier clients 0.18% (min commission of $25), and HSBC Jade clients 0.15% (min commission of $18).
^^^^ OCBC Securities charges a CDP Quarterly Sub-account Maintenance Fee of $15; and a Foreign Shares Custody Fee of $2 per month.
^^^^^ SAXO Capital Markets charges an annual 0.12% custody fee on non-SGX stocks (i.e. accounts holding positions in stocks, ETFs and Bonds)
^^^^^^ Standard Chartered is offering its Priority Banking Clients a brokerage trading fee of 0.18% with no minimum commission fee.
^^^^^^^ UOB Kay Hian charges a CDP Quarterly Sub-account Maintenance Fee of $15
Let’s get into the data —> Charts!
Let’s be realistic and honest with ourselves, it is unlikely that you will buy for more than $50K at one go.
So I’ve made four simulations based on the below orders amount:
$1,000
$3,000
$6,000
$9,000
And for each of these simulations, I came out with three different datasets:
First thing I did was to compute the cost per 1 trade for each and every of the trading platforms.
Then, the cost per year based on the assumption of 1 trade per month
I ended up computing the yearly costs savings you will realise, if you pick the only Winner out of the 12 trading platforms…
1. Trading fees per trade
And the Winner is… INTERACTIVE BROKERS! Hands Down!
2. Trading fees per year (= 12 trades)
Obviously here too, needless to say that the more trades you execute, the more money you will lose with any of the 11 Losers.
And losing this money means that it is money that you cannot invest anymore!
4. Yearly Cost Savings if you are using IBKR
In Conclusion, if you are using any of these 11 different trading platforms, you are losing big.
How to become a Winner?
I’m sure you know what you have to do: immediately switch to Interactive Brokers to stop the bleeding!
I’ve been using them since I’ve heavily started investing 4 years back and they never disappointed me once. They have been in the business for 45 years and are still here. I guess that shows how serious this company is.
On top of that, they have decided two weeks ago to eliminate their monthly inactivity fee so there are no impediments to maintaining an account with IBKR.
Effective July 1, 2021, IBKR customers will no longer be charged USD 10 for not maintaining a minimum balance or transaction activity.
It simply makes IBKR one more time the cheapest and best trading platform available out there.
The Cherry on the Cake: Up to US$1,000 of free IBKR stock when opening an account at Interactive Brokers
If you sign up with my link, you will be offered US$10 of IBKR stock for every $1,000 invested via their platform (Regardless the stocks or ETFs purchased).
The offer is limited to US$1,000 of IBKR if you invest US$100,000 on the platform.
On top of saving a lot of money, you are also about to make easy money.
Tested and approved by friends & family.
“I disagree with you, IBKR (Interactive Brokers) is not the best. I’m using SAXO, they are cheaper”
Sorry, I must disagree with you. SAXO is crap and expensive.
Don’t forget that on top of the commissions fees listed here-above, SAXO Capital Markets charges an annual 0.12% custody fee on non-SGX stocks (i.e. accounts holding positions in stocks, ETFs and Bonds).
If you are willing to do the maths (actually no need as it is so obvious you’re losing lots of money with them), you will see the disaster… And this adds up year on year…
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*Disclaimer: “Investing Mad(e) Easy” newsletter is not intended to be and does not constitute financial advice, investment advice, trading advice or any other advice or recommendation of any sort. More info here*