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Not all brokers or trading platforms provide access to global stock exchanges, so if you want to buy and sell US stocks, you’ll need to find one that offers the service for a cost effective brokerage fee.
There are many reasons for Singapore investors to own stocks listed in the US:
Compared to companies in Singapore, US firms benefit from various competitive advantages, including the country’s vast geographical reach and market size. As such, US companies are exposed to growth potential on a much larger scale.
In the last decade, Wall Street’s S&P500 index has delivered returns of around 103%, while Singapore’s equivalent the SGX STI30 returned around 9.2% for the same period (one-fifth higher than the regional APAC benchmark).
US stock markets also offer a greater diversity of companies than is available in Singapore. The New York Stock Exchange and the NASDAQ are the two largest stock exchanges in the world in terms of market capitalisation, and also offer some of the most lucrative opportunities in the world. Many of the world’s biggest global growth companies, such as Facebook, Amazon, Alphabet, Netflix and Google (FAANG) are listed in the US.
Aside from opportunities to profit, it’s important to have a diversified portfolio of stocks. This means investing in companies from a range of sectors as well as countries. If Singapore’s economy were to slow, stocks listed in another country can act as a buffer.
Before we leap into the specifics of investing in US stocks, it’s important to know the different indices available. In Singapore, our local stock market benchmark is the Straits Times Index (STI).
In the US, there are three major indices:
There are a growing number of online stock trading platforms that offer access to international stock exchanges for Singapore investors. Some platforms offer international accounts that are separate from their Singapore trading accounts, while others are fully integrated on the one platform.
Here are some of the platforms that allow US stock trading in Singapore:
Make sure that you take the following features and questions into consideration when comparing between of US stock trading sites:
A blue chip is stock from a well-established company with a strong reputation for quality, reliability and stability. Blue-chip companies have a history of solid performance and often pay dividends.
Here are the top 10 blue chip stocks for this year, as identified by U.S News & World Report:
|US blue-chip stocks||Ticker||Stock price (As of 2 February 2021)||Daily dividend yield|
|Johnson & Johnson||JNJ||US$161.25||2.47%|
|JPMorgan Chase & Co.||JPM||US$232.24||2.69%|
|The Walt Disney Co.||DIS||US$176.96||0.00%|
|Procter & Gamble Co.||PG||US$128.69||2.46%|
*Data source: MarketWatch, Inc.
One of the key risks to be aware of when trading US stocks is that you may not have the same level of knowledge and expertise as you have when trading SGX stocks. Investing in an area, industry or country which you know little about is always risky, so it always pays to make sure you know what you’re getting yourself into.
Another factor worth considering is the tax implications of international trading. You don’t want to make any mistakes when declaring your income and find yourself on the wrong side of the IRAS, so familiarise yourself with the tax treatment of your investments as soon as possible.
Read our AvaTrade review to find out if its right for your trading needs and the simple steps you can take to sign up for an account.
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