This review of MIDF Invest will cover Malaysia’s first brokerage that gives us access to international stocks at a cheap and competitive rate.
I’ve long been advocating against using local brokerages for international stocks. But with MIDF Invest, I can finally change my stance. No longer will we be charged once locally, and then again internationally, and vice versa when we sell said stock.
I digress, back to our new favorite local broker – MIDF Invest.
MIDF Invest – Registration & Account Opening
To get started, you’ll first have to download the app here:
https://link-to.app/LeighLee
The registration process can be completed in 10 minutes to 24h in most cases according to MIDF.
Mine took less than 24 hours as I did it at night.
You have to:
- Submit front and back pictures of your IC;
- Record a 20 seconds video;
- Receive and submit SMS verification;
- Receive and submit email verification;
- Create your PW; and
- Answer questions.
MIDF Invest – Brokerage Fees & Rates
MIDF’s rates are as above, which are pretty self-explanatory. You get 16 free trades if the trade value is <$1,000 per trade for the first 30 days. Thereafter, you move on to the Investor or Trader category depending on how often you trade.
The other fees you’ll need to pay attention to are the Stamp Duty and SEC Clearing Fees.
Stamp Duty is RM1 for every RM1,000 and capped at RM200.
Clearing Fee is 0.00051% of the total sale value, rounded up to the nearest cent.
The rates are pretty competitive when compared to our local brokers. It might be beneficial to make full use of your Explorer status during the first month.
From the calculator from MIDF above, a $1,932 trade will incur a $12.64 total fee. That’s about 0.65% in total fees per trade.
As for dividends, there are no extra charges there. Thank god. There will only be the standard withholding tax based on the country you bought the shares from.
Forex Rate
As I have yet to use MIDF’s platform at the time of this article, I cannot confirm the forex rates. However, the MIDF team has assured me that it is competitive and pretty standard. There are no forex fees charged by MIDF, just a straight-through conversion based on the day’s forex rates.
Interest on Cash Balances
Investors will also be given a small return in the form of interest for unutilized cash held in MYR in your MIDF Invest account. None for balances held in other currencies.
Another feature I confirmed with MIDF was that once your shares are sold, it will not be automatically converted back to MYR. For example, after selling a US stock, the cash will be held in USD. This is a good thing as we won’t be subject to unnecessary forex conversion.
Safety & Legitimacy
As far as I’m concerned, going through a local brokerage is as safe as it gets for us Malaysians. They’re of course regulated by the Securities Commission. MIDF is also wholly owned by our very own Permodalan Nasional Berhad (PNB).
If you didn’t already know, Permodalan Nasional Berhad (PNB) is one of the largest fund management companies in Malaysia with assets under management (AUM) of RM322.6 billion (as of 31 December 2020).
And the ASNB mutual funds we love so much are handled by PNB.
MIDF Invest – Comparisons
Right now, as a local broker offering access to international stocks, MIDF is in the lead in terms of fees (which matters a lot). Other local brokers ie Maybank, CIMB, Public Bank, HL Bank etc do offer us Malaysians access, however, the fees are way too high for retail investors like us. I cite a previous example where I received a net dividend of ZERO dollars after all the fee deductions for my investment in Vanguard ETF through Hong Leong.
So, vs local brokers, MIDF is top. If we look at online international brokers like eToro, Tiger Brokers TD, and Interactive Brokers, MIDF losses out in terms of fees.
The trade-off? You get a regulated broker and peace of mind as a Malaysian with a local broker. This is especially important if you’re planning a huge investment in international stocks.
Another advantage of using a local brokerage is the ease of transfer of funds. You can easily inject more capital within minutes.
Moving Forward
I have opened an account with MIDF but I have yet to deposit any money. I do plan to hold long-term ETFs and dividend stocks through MIDF.
With MIDF being the first (AFAIK) relatively cheap brokerage, we have with access to international stocks, it will be interesting to see if our other brokers step up their game in offering better rates.
End.
I’ll be giving MIDF a trial run soon. My plan is to purchase and hold ETFs through the platform for now. Vanguard’s S&P 500 ETF will be my first buy. Might even be building up a big portfolio of ETFs and some long-term dividend stocks.
I’ll also be updating and inserting MIDF Invest into my previous comparison post soon. So keep an eye out for that.
Once more, you can download the app here:
https://link-to.app/LeighLee
