Although investing in foreign stocks can take you out of your comfort zone, it isn’t necessarily a bad thing. Investing in foreign listed stocks can be beneficial for many reasons. One great reason is diversification: whether it’s diversification of assets or currency. The benefit of this is obviously to spread out investment risks. Dealing in a plethora different currencies will help you cancel out global currency fluctuations. Another obvious reason could be just to keep your money ‘offshore’. There are thousands of Major Corporations overseas, such as South Korea for electronics, Brazil for steel, Australia for mining and USA for technology. Some big corporations and brands have given investors incredible rates of return!
2 Ways for Foreign Stocks Investment
There are basically two simple ways you can trade in foreign shares.
- Method 1
Open a trading account in the country where the respective stocks originate from. So for instance, if you want to invest in an American company, open a trading account in the US to buy stocks at the New York Stock Exchange (NYSE). In this way, you can keep your transaction costs to a minimum.
- Method 2
Open a global trading account in Malaysia associated with the local investment banks and security firms, and purchase foreign share. The location of your assets will be considered local although technically your money in invested overseas. This provides convenience, especially when taking money out to fund your retirement, or transferring your wealth to your children.
Means of investment
You’d be surprised at how many brokerage firms and investment banks there are in Malaysia that aid in foreign investment. So here are just a couple of prominent banks that provide global share trading. This is by no means an exhaustive list, but just an example of the diversity and their rates and services.
|Provider & Product Name||Online/Overseas transaction fees/Brokerage commission||Other fees||Dividend Fees|
|NYSE (USA)||SGX (Singapore)||ASX (Australia)|
|eAlliance Share||Either US$ 20 min. or 0.15%, whichever is greater||Either SGD 25 min. or 0.10%, whichever is greater||AUD 35 min. or 0.25%, whichever is greater|
|JF Apex||Either US$ 29 min. or 0.35%, whichever is greater||Either SGD 25 min. or 0.18%, whichever is greater||Commission: Less than RM100,000: 0.06%, More than RM100,000: 0.30% of contract value.|
|CIMB I*Trade||Either US$ 25 min. or 0.40%, whichever is greater||Either SGD 28 min. or 0.42%, whichever is greater||AUD 50 min. or 0.70%, whichever is greater||Scrip S$20/US$15, Cash US$10-80, 1% on net dividend|
|HL Brokering (used by PC Wong, thetrainer of Invest Foreign|
|Corporate excise fees for dividends flat rate RM2.50|
|Jupiter Online||Not Applicable||Not Applicable||Dividend processing 1% RM5 min -RM100 max|
|Maybank2u||Either US$ 25 min. or 0.40%, whichever is greater||Either SGD 25 min. or 0.40%, whichever is greater||AUD 60 min. or 0.40%, whichever is greater|
Clearance fee 0.04% (Singapore)
|Public Invest e-Trade||Either US$ 50 min. or 0.80%, whichever is greater||Either SGD 40 min. or 0.75%, whichever is greater||AUD 60 min. or 0.80%, whichever is greater||Dividend Reinvestment/Handling RM2-65 per payment/ dividend cheque.|
Dividend Reinvestment Plan (DRP) subscription: RM2-65 per (with additional stamp duty fees)
|SJENIE||Either US$ 35 min. or $0.05%/share, whichever is greater||Either SGD 50 min. or 0.25%, whichever is greater||AUD 50 min. or 0.50%, whichever is greater||n.a.|
|Utrade||Either US$ 30 min. or 0.42% for <RM100,000, whichever is greater||Not Applicable||HKEX (Hong Kong): Either 0.30% for >RM100,000 min. or 0.42% for <RM100,000; whichever is greater||SGD 1 with GST for less than or equal to dividend SGD 10;|
SGD 5 with GST for less than or equal to dividend SGD 500;
1% of dividend capped at SGD 25 with GST Dividend greater than or equal to SGD 500
Find a suitable US stocks trading provider
Needless to say, there are lots of stock brokers out there. The only way to find a suitable one for you is to actually do your homework on them! For instance, my friends from Intel Penang use Ameritrade. Their unbeatable fees and various other facilities, like 3rd party research, makes it highly trusted and efficient! On the other hand, Interactive Broker is highly recommended by Peter Lim, trainer of Bursa Method, for its low interest margin financing facility. In contrast, I personally use Wells Fargo Trade because I have an account there when I stayed in the US between 2011-2012.
No matter which brokerage firm or method you use, it is important to invest safely in good companies. Don’t speculate. Do research and invest safely based on value investing method.