Looking to trade and invest in US and international stocks as a Malaysian?
I’m initiating this article because I’ve received messages from readers with concerns about the current broker I’m using – eToro.
Many have quoted an article by the Edge highlighting that eToro isn’t licensed under the Securities Commission of Malaysia (SC) right now. I’ve continued to use eToro because they are licensed by Australia’s SC equivalent – Australian Securities and Investments Commission (ASIC).
Nevertheless, I’m inclined to give Malaysian investors alternatives to eToro because at the end of the day, choices help us make decisions. And I don’t want anyone to use our local brokers because as you’ll find out later, the fees you pay is downright crazy.
Another important thing to note is – like eToro, all international brokers I’ll be mentioning that are actually worthwhile to open a brokerage account with are not licensed with SC. They do have jurisdiction in different countries though which I’ll mention later in the article.
Local Brokers
Let’s start off with what NOT to use. Here’s an example of a local broker I used to trade – Hong Leong Investment Bank.
I actually made a significant amount from investing in Berkshire Hathaway (B shares) and Vanguard’s S&P 500 ETF. I didn’t keep track of the fees I paid to purchase those stocks but trust me they weren’t little. But, holding the stocks for the long term helped mitigate that.
What I didn’t realize was this..
Why you shouldn’t use local Malaysian brokers to trade internationally.
This is the supposed dividend I was to receive from my Vanguard ETF. USD20. After deducting all the fees – I’m left with 52 cents. Thank you local brokerage.
I hope I’ve made the case for not using our local brokerages to trade US and international stocks.
Moving on!
eToro
I’ve written an in-depth review on why I am using eToro hERE.
Pros
- Zero Fees
To put it simply – they charge zero commission and zero fees for US stocks. - Regulated
eToro might not be regulated under our local SC but they are under Australia’s ASIC. Which actually has higher standards compared to SC. - Fractional Shares
eToro allows you to buy a fraction of a share. With the MYR falling always, this allows us Malaysians a lower entry point. You don’t have to fork out $450 for one Tesla share. Instead, you can start off with $100 or even $10 for that matter. - Easy and Intuitive User Interface
The easiest to learn and use. The charts are simple and straightforward. If you’re looking to go deep into charts and volume of a stock, eToro wouldn’t be suitable for you. - Copy Trading
If you’re looking to just copy someone’s portfolio, you can do so with just a click on the platform. I’m on eToro as dividendmagic and my portfolio is always available to be copied here: https://www.etoro.com/people/dividendmagic
Cons
- You can’t trade every stock
eToro does not have every stock in the US and internationally listed on their platform. They do have all the big ones as well as more popular stocks on there though which works for me.
Sign up
To sign up and open an account with eToro, head hERE.
Tiger Brokers
Pros
- Regulated
Tiger Brokers is again not regulated under Malaysia’s SC but they are regulated under SC’s equivalent in Singapore – the Monetary Authority of Singapore (MAS) - Listed on NASDAQ
Tiger Brokers is a listed public company backed by Interactive Brokers Group Inc (IBKR) and Xiaomi (amongst others). - In-depth data
Tiger provides much heavier data and charts for its users. Its level 1 data is sufficient for me but if you want heavier stuff, you can pay for higher level access.
Cons
- Fees
Unlike eToro and TD, Tiger charges fees. For trading US stocks, you’re charged US$0.01 per share or a minimum amount of US$1.99 per trade. This does not include forex charges which have been waived by Tiger for now. - You can’t trade every stock
Tiger has much more stocks available for trading in the US and internationally compared to eToro. However, they don’t have stocks from the London stock exchange right now. - No fractional share trading
Unlike eToro, you don’t get fractional share trading with Tiger Brokers. The cost to purchase a single share would be higher for some companies.
Sign Up
You can sign up with Tiger Brokers hERE and use the code DIVMAGIC for the following benefits:
- Free level 2 Data for US stocks for 30 days
- 1 commission-free trade for US or HK stocks (after the account is approved and opened)
- stock voucher worth up to SGD 100 depending on the amount funded
TD Ameritrade
TD Ameritrade has been around for a long time and a household brokerage name alongside IBKR. I’m picking TD instead of IBKR because of IBKR’s custodian fees of $10.
Pros
- Zero fees
TD, like eToro charges zero fees for US stocks including ETFs - Regulated
Like eToro and Tiger and almost all other international brokers, TD isn’t regulated under SC. TD Singapore however is regulated under Singapore’s MAS. - Listed on NASDAQ
TD Ameritrade, the parent company of TD Singapore is listed on NASDAQ.
Cons
- No fractional share trading
Unlike eToro, you don’t get fractional share trading with TD Ameritrade. The cost to purchase a single share would be higher for some companies. - Long Account opening time
It is tedious to open a TD Ameritrade account. I’ve learnt from experience. It’s been a few months now and they are still processing my documents.
Sign up
To sign up and open an account with TD Ameritrade Singapore, head hERE.
End.
Right now, I actually have signed up for all 3 brokers.
A summary of all 3 can be found below based on my experience and research. I’ll continue to update the table and my reviews of both US and International brokers as I try and test them out.
I primarily trade with eToro because of their zero commissions. If however, I want to purchase a certain stock which eToro does not have on their platform, I turn to Tiger Brokers.
I also use Tiger Brokers for their more in-depth data provided.
And the big question as to why I’m not using TD? Their sign up process is long and tedious. I registered months ago and right now I’m still waiting for them to approve my documents.
Lastly, a few things to note when investing in the US. You should know by now that Malaysians are taxed a 30% withholding tax as foreigners by the USA. Which is why dividend investing isn’t that great when investing in the US.
Instead, I focus on capital gains there. Because as Malaysians, we don’t pay capital gains tax like our US counterparts. I leave dividend investing to local stocks, and focus on growth and capital gains in the US.
You can check out my US holdings and portfolio hERE. Onwards and upwards!
For the next article of the Investing Series, check out article 005 – Best Dividend Stocks in Malaysia.
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