The Average Cost of Online Brokerages in Singapore

If you ever wanted to invest and make your money work harder for you, you might have considered buying stocks, bonds, unit trusts, or other assets.

However, with so many online brokerages available, how do you know which one offers the best deal? The average investor without hundreds of thousands of dollars to trade should minimise the commissions they pay as these can eat into your returns quickly.

To help you understand what it costs on average to invest in Singapore via an online brokerage, we’ve prepared this nifty guide.

Besides the brokerage’s commission fee schedule, we also assess other important features it has, such as the number of markets it covers. This helps you make a better-informed investment decision and ensure the brokerage you select meets as many of your needs as possible.

Related: What You Can Invest In Singapore With S$5,000

What Is the Average Fee Commission Online Brokerages Charge?

In Singapore, there’s a wide range of online brokerages that you can use to trade stocks on. Most of them are owned by big financial institutions like DBS, Citi, and Standard Chartered, while some are independent platforms.

All these online brokerages have a minimum commission fee per trade. For instance, brokers will charge anywhere from less than S$1 to as much as S$28 as a minimum fee. However, if your trade is large enough, the percentage fee you pay is reduced. This fee scales downwards on a tiered basis as your trade’s size increases.

Below, we’ve prepared two handy tables listing commission fees as well as market access for the different online brokerages in Singapore.

Commission Fees for Trading on the Singapore Exchange (SGX)

Market Access Comparison Between Online Brokerages

Which Markets Do Online Brokerages Cover?

Singapore is a relatively smaller market – literally and figuratively – with only a limited number of stocks available for investors, as compared to even neighbouring exchanges. For instance, the Straits Times Index (STI) comprises only 30 companies, while the S&P 500 consists of the top 500 publicly-listed companies in the US. Even the Hang Seng Index has more than double the components of the STI.

Furthermore, some investors might be more interested in emerging markets like the Philippines, Malaysia, and Thailand. If this is the case, you might wish to find an online brokerage that allows you to access international markets at the lowest rates possible.

One example is Saxo Markets, which gives customers access to 26 markets worldwide at a low fee (0.08%). Furthermore, the minimum fee you take on is also lower compared to other online trading platforms. Other brokerages at this point in time do not carry this variety at such a low price.

How Does the Size and Frequency of Your Trades Affect the Commissions You Pay?

All in all, commissions matter more for investors who tend to trade more frequently with smaller amounts.

For instance, let’s consider a hypothetical comparison. Over a course of one year, Bob has a portfolio of S$100,000 and he trades once a month. Jane on the other hand, has a portfolio of S$50,000 and she trades once a week. For simplicity’s sake, let’s assume they trade 20% of their portfolio each time they make a transaction.

Since Bob’s trades will be S$20,000 each, he will be paying 0.25% per trade, while Jane’s S$10,000 trades will cost her S$25 per transaction (0.25% of S$10,000 is equal to the S$25 minimum commission).

After a whole year, although Bob is running twice as much capital as Jane, she would have paid more than double the commission that Bob will have paid. As you can see, this is because Jane is trading every week while Bob only trades once a month.

Therefore, you need to consider how much and how often you will be trading before choosing an online brokerage.

For portfolios with large amounts of capital with infrequent trades, commission rates will generally matter much less than they do for portfolios with small amounts with frequent trades.

Is There Anything Else to Consider When Selecting an Online Brokerage?

In some cases, an investor may be more focused on margin financing, availability of derivatives products, and other features.

In many cases, only certain online brokerages can provide a great user interface coupled with live data integration. While this may not matter to some investors, the minute-by-minute data upload may be crucial for certain trading strategies.

Also, if you have a simple trading strategy with a long-term investment horizon, you may only need to care about the commission fee schedule. Investors who prefer to engage in short-term strategies, or are fairly new to online trading, might want a trading platform with a wider range of features to learn and understand the various instruments out there.

Be sure to do you own research in terms of what kind of strategy you want to employ, and what services will matter most to you. This way, you can focus on picking stocks, bonds, or unit trusts that are the most ideal for you instead of worrying about commission fees which will eat into your returns.

If you’re looking to kickstart your investment journey, we’ve compiled all the best online brokerages in one handy page. You can conveniently view each online brokerage’s pros and cons, and sign up once you have your mind set on a platform!

Read More:

• 5 Factors To Consider When Choosing An Online Brokerage In Singapore
• 3 Investing Tips for Millennials: Start Investing Early, Aggressively and Independently
• 4 Financial Platforms to Help You Manage Your Money From Home
• How To Protect Your Wealth In A Global Recession
• 3 Things to Watch Out For When Investing in Emerging Markets

Cover image source: Unsplash