Best Brokerage Accounts To Start Your Investment Journey In Singapore

The first step to investing in the financial markets starts from opening a brokerage account. But as for that step before the first step, you’ll have to invest in the best choice of brokerage account for yourself.

Best Brokerage Accounts in Singapore on SingSaver

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Despite the market volatility since the start of the COVID-19 pandemic (or perhaps, thanks to this pandemic), more young investors have started their first foray into investing. In the US market, investors have put more money into stocks in the first five months of 2021 than in the last 12 years combined.

Here in Singapore, there has also been increased interest in investments. 

Rather than allowing our idle cash to erode due to inflation, investing these dollars is one way to reduce the opportunity cost and grow our wealth. 

To invest in the various financial products available, a brokerage account and CDP account are required. Here’s what you need to know: 

• What is a brokerage account and CDP account 
• CDP-linked vs custodian account
• Brokerage account fees and charges
  • CDP-linked brokerages
  • Custodian accounts (SG stocks)
  • Custodian accounts (US stocks)
• How do you choose a brokerage account that suits you
• Best brokerage accounts to use
• Read reviews of the best online brokerages in Singapore

However, if you are new to investing or have just started out on your investment journey, get started with the basics. Learn how to buy shares, find out the different types of investment products, and more here:

• Find Out How To Buy Shares And Stocks With An Online Brokerage In Singapore
• Learn How To Invest In Singapore
• Guide To Popular Types Of Investments
• Find Out How To Invest In Exchange Traded Funds
• Find Out How To Build A Passive Income Portfolio
• Find Out What Is A Fixed Income Investment
• Learn How To Invest In Unit Trusts In Singapore
• Find Out How To Build A Stock Portfolio With A 100k Investment
• Find Out What Are The Different Types Of ETFs In Singapore
• Find Out What Is The Best Investment Strategy For Your Age
• Read The Beginner's Guide To Investing In Emerging Market Stocks
• Learn How To Invest And Build A Multi-Asset Portfolio In Your 20s

What is a brokerage account and CDP account? 

A brokerage account is the second step to your investment journey, with the first step being to open a Central Depository (CDP) account. 

CDP account: Owned by the SGX, a CDP account provides integrated clearing, settlement and depository services for a wide range of products in the Singapore Securities Market. Your CDP is where your securities are held. To apply, you must be 18 years old and you will require a Singapore bank account. You can open a CDP account by applying online and using MyInfo for quicker application. 

Brokerage account: A brokerage account comes with more choices and you can choose from more than 10 different brokerage firms. You will need a brokerage account to buy and sell investment products on the financial market. This includes equities, fixed income products and other trading products. 

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CDP-linked vs Custodian account

When choosing a brokerage account, you’ll find that there are generally two different types of accounts: CDP-linked and custodian accounts. Each type of account has its own pros and cons.

CDP-linked account: With a CDP-linked account, the stocks are purchased under your name and will be credited into your CDP account. This means that you own these shares and become a shareholder of the company. This is only applicable for trades made on the SGX. 

Custodian account: Your stocks are purchased through a nominee account that is managed by the brokerage firm. This means that the owner of the stock is legally the brokerage house and they hold the stocks on your behalf. If you’re buying overseas stocks, you will require a custodian account. 

If you’re a short-term trader, custodian accounts will be more ideal as it saves you from paying higher costs when you make numerous trades. If you’re a long-term investor, there could be more value in getting the stock credited to your CDP.

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Brokerage account fees and charges 

CDP-linked brokerage accounts

With S$25 being the common minimum commission fee, what stands out is the low minimum commission fee for DBS Vickers Cash Upfront account and FSMOne, although this is limited specifically to 'Buy' and 'Sell' orders respectively. 

Custodian accounts (based on SG stocks)

This is based on commissions charged for the Singapore market, with assets of less than S$30,000. For customers that have more assets with the brokerage firm, you can enjoy lower commission fees.

The minimum commission fee of S$10 is common, with the exception of POEMS, Saxo Markets and uSMART currently offer no minimum commission fees.

If you are a priority customer of these brokerages, you also enjoy additional perks such as lower commission fees. For example, if you are a Standard Chartered Priority Banking client or a POEMS Privilege client.

Custodian accounts (based on US stocks)

Dabbling in US stocks has gotten cheaper and far more accessible, thanks to the new online brokerages in recent times. Here's how much (or how little) you'll have to pay when trading US stocks.

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Choosing a brokerage account that suits you

With so many brokerage accounts to choose from, how do you pick the one that suits your investment needs? Here are a few factors that you should consider.

Fees: Fees can eat into your investment returns. Most brokerage providers impose a minimum commission fee, with a few rare exceptions. With this minimum fee imposed, it could make more financial sense to be trading a larger amount of money so that the commissions would not take up a significant portion of your capital. Do also keep in mind that the fees could differ depending on the market you trade.

On this note, do not be fooled by zero-commission free trades that might convince users that trading is absolutely free. Do beware of other fees like a per-share settlement fee that some brokerage accounts charge, especially those without a cap. This could potentially put you in a deficit if the price of each share is low. A recent article by The Business Times highlighted a trader who sold his shares for a total of US$5,000, only to realise that he found himself with a US$11,000 deficit because of the high settlement fee that he was charged.

Perks given through promotions: Brokerage providers run promotions from time to time. This can come in the form of commission fee waivers, lowered commissions, vouchers and cash rebates. You can make the most of commission-free promotions by making more transactions during that period. 

Products available: What investment products are you planning to use and what does the brokerage provider offer? For example, this could be stocks, bonds, Contracts for Difference (CFD), forex, commodities, futures and more. 

Tools and indicators provided: What tools do you frequently use and does the brokerage account provide those tools? This could be technical charting tools, various indicators, drawing capabilities, stock screeners and more.

Market access: Which global exchanges can you access with that provider? This would be important for those looking to trade in overseas markets such as Hong Kong, China and the USA, or if you are looking to trade in specifically in lesser known markets.

Platform interface: Not all apps are created equal. Some are more user friendly than others, being easier to navigate and execute trades. However, this user appeal could also be a largely personal preference. The speed and responsiveness of the app to show prices and execute trades are also important, particularly for traders that trade with short timeframes.  

Investment insights: Brokerage accounts also go the distance to value add by providing investment insights such as buy/sell/hold calls, research reports, market outlook commentary, stock ideas and other materials for their clients to use. 

Some brokerage accounts also offer demo accounts. These demo accounts are a great way to test out the platform and decide for yourself if their web platform or mobile app is your cup of tea. 

You may also read these comparisons to find out the best online brokerages and investment products to suit your financial needs and also investment strategies.

Compare Between The Best Online Brokerage Account In Singapore
Compare The Best Investment Apps In Singapore
Compare Between Moomoo Vs Tiger Brokers

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Best brokerage accounts in Singapore

With so many different brokerage accounts available, we have filtered them down into a few important categories. 

Best overall and for overseas stocks: Interactive Brokers or ProsperUs

Known for their incredibly low fees, you can use Interactive Brokers (IBKR) to invest globally in a variety of products — stocks, options, futures, currencies, bonds and funds — all from a single integrated account in 135 markets across 33 countries.

There are two different pricing plans, IBKR Lite and IBKR Pro, both of which offer low or zero commission fees. However, IBKR Lite is only offered to direct US clients and any client of an Introducing Broker or if you are an employee of a firm using Employee Track. 

Previously, customers could not use IBKR to trade Singapore shares, making IBKR a great option for low-cost trades in overseas markets. However, in July 2020, Interactive Brokers opened their Singapore office and investors will now be able to use IBKR to trade Singapore stocks.

IBKR has also removed their account maintenance fee requirement. Previously, this was US$10 per month, less commission paid that month — a deterring factor for investors that don't make multiple trades monthly.

Check out our full review of IBKR here.