Investing in US ETFs from Singapore: An expat’s guide. In general non-US ETFs are preferable for those living internationally, but this article will explain your options.
If you have any questions or want to invest as an expat or high-net-worth individual, you can email me (advice@adamfayed.com) or use these contact options.
Introduction
Singapore is a country known for its stability and security, but there are some things to be aware of when investing in ETFs from Singapore.
Exchange-traded funds (ETF) are very similar to a mutual fund, in that it is a form of a pooled investment. As such they are a powerful tool in an investor’s portfolio.
ETFs are often made to track and monitor the ups and downs of a certain sector, index, commodity, or other asset, but unlike mutual funds, they can be bought or sold on a stock exchange just like normal stocks can.
If you’re well-versed in investing already, you can find the characteristics of an index mutual fund and a stock listed on an exchange in ETFs. Numerous are affordable, have little administration costs, and are tax-efficient.
In essence, an ETF is a collection of stocks bundled together for sale as a single share. But like a stock, an ETF can be sold at any moment during the trading day, unlike a mutual fund.
ETFs were developed to offer a trading vehicle that mirrored the price of several indexes. For instance, the SPDR monitors the stocks in the S&P 500, an index of the 500 largest U.S. corporations.
Anything from the price of a single commodity to a sizable and varied group of securities can be tracked by an ETF. ETFs may even be designed to follow particular investment strategies.
In this article, we will discuss how to buy American ETFs from Singapore so you can get the best investment experience possible and meet your financial goals.
What is an ETF?
ETFs are a type of fund that trades like stocks. Before you can invest in an ETF, you need to understand how they work and what they provide investors.
An ETF is an index fund that tracks the performance of a particular investment index such as the S&P 500 or Dow Jones Industrial Average (DJIA). The price of an ETF reflects its net asset value.
Like its name suggests, ETFs are funds traded on an exchange like the Singapore Exchange (SGX), which means they trade like stocks.
ETFs hold multiple underlying assets, which means that instead of buying individual shares of a company, you can buy a fund that tracks an entire industry, index or market segment where that company can be found.
An ETF may hold hundreds or thousands of equities from different industries, or it may be confined to a single sector or industry.
While some funds primarily concentrate on U.S. offers, others have a worldwide perspective. For instance, equities of different banks from throughout the industry would be included in banking-focused ETFs.
ETFs, are a popular choice among investors and financial advisors because they offer a cheap method to gain exposure to hundreds or thousands of equities and bonds.
Investing in ETFs from Singapore is easy as they can be traded on the Singapore Exchange (SGX) and global exchanges such as NYSE Euronext and NASDAQ OMX PHLX.
They are also available in online brokerage platforms such as Robinhood Financial Inc., Fidelity Investments and E*TRADE Financial Corporation.
The prices of ETFs fluctuate throughout the day based on supply and demand from investors who want to buy or sell them at any time during trading hours – usually between 9 AM PST (Pacific Standard Time) and 6 PM PST (Pacific Daylight Saving Time).
Why invest in U.S. ETFs from Singapore?
ETFs are easy to buy and sell. They are also quite liquid, which means you can buy in and sell out of them quickly, which makes the process of investing in them more convenient for you.
For expats living in Singapore, this liquidity is valuable for flexibility. If a particular stock is going up or down, it’s easy to buy or sell shares based on market conditions because there will be plenty of buyers looking for stocks at good prices.
You won’t be left holding the bag if something goes wrong with your initial purchase—you should have enough liquidity to get out before things become too difficult or expensive for you.
ETFs are a popular investment vehicle for many Singaporeans because they are passive investments that do not require any maintenance or management by the investor. It is also relatively easy to buy ETFs from Singapore.
You simply buy the ETF and hold it until it grows your investment. Then it will be up to you when you want to sell it to reinvest the proceeds in another asset class or use the proceeds for whatever needs you may have.
Because they’re traded both on exchanges where investors can easily access them, investors have access to more information than they would otherwise have had with traditional mutual funds.
This includes price quotes from various market makers such as banks, brokers or hedge funds; bid/ask spreads; order executions; trading volumes, etc., which gives you greater confidence when making your investment decision based on these metrics alone.
If you’re looking to diversify your portfolio, investing in a US equity ETF is a great way to do so. The U.S. equity markets are the largest in the world and continue to be among the deepest, most liquid and most efficient.
This makes it an attractive option for investors who want to diversify their portfolios without having many different types of investments.
An advantage of investing in US markets as opposed to other markets such as Singapore or Australia is that companies headquartered here tend to be leaders in certain industries or sectors—such as technology companies like Apple Inc.; pharmaceuticals manufacturers like Pfizer Inc.; financial institutions like Moody’s Corporation; industrial giants like General Electric Co.; and even retail chains such as Wal-Mart Stores Inc.
An EFT based on U.S. indices then has less volatility than a single stock because it represents several stocks in a given market segment.
A single stock may be particularly susceptible to a significant decrease because of an internal management issue, an increase in the cost of debt servicing that is eroding margins and the bottom line, or some other error or tragedy.
Although the price of a sector’s stocks may drop simultaneously, it is common for competitors within the sector to do well when their rivals’ businesses see a reduction in profits or even go out of business.
And because ETF transactions, such as buying ETFs from Singapore, take place between investors who either own shares of the ETFs and those who want to buy the shares, they are like stocks. The securities included in the ETF package are not actually sold.
Hence, there is no obligation for capital gains tax in normal circumstances. However, there are also situations where an ETF must sell part of the shares in its portfolio, resulting in capital gains.
It should be noted that Singapore does not tax capital gains anyway. However, there are caveats. Investors are advised to seek guidance on complex tax concerns from their tax professionals or attorneys.
How do you buy U.S. ETFs from Singapore?
You can invest in ETFs from anywhere in the world by opening an account with a brokerage. ETFs are traded on exchanges around the world, so you don’t need to worry about currency fluctuations.
If you simply want someone to handle your investments for you, you might want to consult human brokers and financial advisors.
A good financial adviser helps their customers with many different elements of their financial lives by building and managing investment portfolios. Additionally, they offer ancillary services including lines of credit, insurance, estate preparation, and accountancy.
Financial advisors also provide a personal touch to their services, allowing you to communicate your needs and goals with them so you can figure out the best courses of action.
There is also the option of using robo-advisers. Robo-advisors manage your portfolio using technology and automate investing. For example, you can instruct robo-advisors to buy U.S. ETFs from Singapore based on specific criteria.
The trading algorithms used by robo-advisors are more likely to use inexpensive, indexed ETFs than the high-frequency trading (HFT) desks of hedge funds and banks.
In fact, robo-advising is more viable for investors now because of the combination of extremely low-cost ETFs and inexpensive technological options accessible on mobile platforms.
For novice or young investors who don’t have much money to invest, robo-advisors are an ideal option. Because your robo-advisor builds a portfolio of indexed ETFs on your behalf, these platforms are also appropriate for those who favor passive investment strategies.
If you want to directly control your investments, however, you can create brokerage accounts with platforms like E*TRADE, TD Ameritrade, Robinhood, and numerous more online brokerages.
You should also check with your bank to see if you have already access to a self-directed online brokerage account through your bank account.
The self-directed investor was made possible by online brokerage accounts. This investor decides which stocks and bonds to buy for their portfolio after conducting investment research.
These self-directed platforms often offer a variety of research and analysis tools, but they largely leave it up to you to decide which investments are the best.
To assist you in making wise decisions, many offer advice and insights from industry professionals. But ultimately, the trades to construct your portfolio must subsequently be executed by you on their website or mobile app.
Before you open a brokerage account, however, keep note of a few things.
Examine the fees they impose for trade or upkeep. Because ETFs trade like stocks, many brokers no longer impose maintenance, administration, or stock trading fees.
In some circumstances, a minimum deposit may be required to start an account; however, with ETFs, the minimum deposit is typically merely the price of one share. Search for brokerages that have no minimum or reasonable minimums if you’re just starting off.
Most importantly, check to see if offer the types of assets you are interested in. Not all brokers let you buy every kind of investment, and even those that do might not let you trade without paying a charge.
Verify that you will be able to buy the assets you are interested in at your preferred broker if you plan to buy ETFs from Singapore and use them in your portfolio.
What should I keep in mind when buying ETFs from Singapore?
Investing in American ETFs from Singapore allows you to access the US stock market, which has one of the highest returns on investment in the world.
Such ETFs are often low-cost compared with other options available in Singapore and across Southeast Asia, because of low fees, taxes, and minimal management. This makes it an ideal choice for investors who want to invest their money without having to worry about transaction fees or taxes.
If you are someone who is new to investing, it is important that you understand the risks involved with investing in American equities. Investing in US equities can be risky due to the fact that these investments tend to fluctuate more than other types of investments such as bonds and real estate.
Additionally, if a stock or ETF loses value due to decreases in its share price then your investment will also lose money. If there is an increase in the share price, then that’s the time your money will grow.
There are many reasons why you may want to access US equities, and American ETFs make it easy.
Investing in US equities is a good way to diversify your portfolio.
In addition, investors who want access to international markets will enjoy having multiple investment options at their disposal. US equities represent a significant part of the global investment market after all.
As such, it’s a great place to invest for both long-term and short-term goals. If you want to invest in ETFs from Singapore, there are several ways to do so.
We hope we have provided you with an adequate understanding of how to invest in ETFs from Singapore. If you want or need more personalized financial guidance, we recommend you get in touch with us!
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Adam is an internationally recognised author on financial matters, with over 760.2 million answer views on Quora.com, a widely sold book on Amazon, and a contributor on Forbes.
