I've heard a lot about investing in the US S&P 500 indexes, and I'm interested in doing so. How do I go about it? Or is the local indexes a better option? How do I start? - Seedly
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S&P 500 Index

Anonymous

Asked on 28 Jan 2020

I've heard a lot about investing in the US S&P 500 indexes, and I'm interested in doing so. How do I go about it? Or is the local indexes a better option? How do I start?

In my early 30s, have saved up quite a bit (more than 2 years of emergency funds), and have a diligent saving habit. Looking into investing some of these money so as to not let it sit in the bank. Completely new to investment!

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You can take a look at the replies here by Hariz and I on the limitations of investing in local indices.

Rather than just investing in local indices, you should look at diversifying globally. If you want an entirely fuss free experience that allows you to do a regular savings plans across CPF, SRS and cash, do consider Endowus. Our Cash and SRS portfolio allows you to invest in Dimensional World Equity Fund which has more than 10,000, SGD hedged PIMCO bond funds, both of which are through a tax efficient vehicle (irish domiciled funds), at a very low cost (0.4% for SRS and up to 0.6% for cash).

You can understand more about our CPF investing portfolio here. It is by far the cheapest way to access a globally diversified portfolio for CPF. https://endowus.com/grow-cpf

If you are willing to put in more effort, buying Irish domicled ETFs through Interactive Brokers or standard chartered bank online trading platform is the lowest cost options. ​​​

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Fatty Finance
Fatty Finance

25 Feb 2020

Please share promo code for endowus. Dimensional world equity fund will include the S&P companies as well as STI companies. So you get all the good stuff
Shengshi Chiam, CFA
Shengshi Chiam, CFA

26 Feb 2020

There are quite a few online already, especially with the financial bloggers!
N
Ninja
Level 6. Master
Answered on 06 Feb 2020

Sti index - boring but somewhat stable

S&p 500 - popular but it would crash eventually if you research enough about the usd. Need to hold super long term.

Vanguard total china etf - even bigger diversification than s&p but risky now as whole world don’t like china. But it’s already number 2

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Frankie Aufhauser-Rappaport
Frankie Aufhauser-Rappaport

06 Feb 2020

Interesting China ETF info thank you
Fatty Finance
Fatty Finance

25 Feb 2020

I actually bought the China total ETF. I talked about it here: https://fattysfinance.com/2020/02/08/start-hoarding-when-others-are-panicking/
Jacob
Jacob
Level 6. Master
Answered on 18 Apr 2020

Hey Anonymous, it is generally cheaper to be investing via an overseas brokerage account compared to some of the local ones such as those by the local banks.

I'd recommend checking out Interactive Brokers, or IBKR as some may call it. They charge around USD$1 per trade, and they use spot rates for their FX. Hence both could help you save quite a bit.

That said, one reason Jorden switched from IB to TigerBrokers could be due to the monthly US$10 inactivity fee imposed for your account holdings that are less than US$100k. This is outstanding of any trading fees for the transations you make for the month. For example, for 3 trades it'll be $3 in trading fees. Hence you'll be charged an additional $10-$3=$7 for that month.

So you may look them up and see which suits your trading style better. All the best!

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Jacob
Jacob

19 Apr 2020

Great to hear your clarification Jorden! Haha was second guessing the reason for your switch. Glad that TigerBrokers is a strategy that works out for you
Jorden
Jorden

20 Apr 2020

Unless trading volume goes up.. then we’ll see about it
Jorden
Jorden
Level 3. Wonderkid
Answered on 18 Apr 2020

I was using Interactive Brokers, but swapped over to TigerBrokers for the reason that TigerBrokers are licensed and registered with MAS.

Fees wise, TigerBrokers are US$1 more expensive in terms of min. fees.

Overall, the platform is pretty good, it gives analysis, charts and also company profile all in one app.

If you are looking to get an account, here's my referral link: https://www.tigersecurities.com/accounts?invite=JORDEN

You'll get 50% off trading commission and also a free stock! :D

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Frankie Aufhauser-Rappaport
Frankie Aufhauser-Rappaport
Top Contributor

Top Contributor (May)

Level 9. God of Wisdom
Answered on 18 Apr 2020

Currently You can trade US stocks with most major brokers in Your country.

In Non-U.S. countries these stocks can be denominated in non U.S. currency when listed on that country's stock exchange.

On the other hand, yes, You can open a USD account (mostly without fees). The trick here is, when You put SGD into Your brokerage account and buy then USD denominated stocks, Your broker will do a currency conversion, which is very expensive but not shown on your trading statements. When You have any currency conversion always consider something like TransferWise (safe and fast) to convert currencies because they are so much cheaper.

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Geraldo L.
Geraldo L.
Level 7. Grand Master
Answered on 25 Feb 2020

Personally, I started with STI ETF first beacuse it was something I was more familiar with - especially with names like DBS, Singtel etc. as part of the top 30 companies within the index. You can do so via a Regular Savings Plan (POSB investsaver or FSMOne), which is easy to setup and maintain. Started off with a small amount first to build up my financial knowledge and get a better understanding of how the markets work.

Once you build the foundation and know-how, it's not that difficult to venture into overseas / global market with the same concept as STI ETF.

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Davin
Davin
Level 7. Grand Master
Answered on 25 Feb 2020

I would suggest you to read a book call Simple Path to Wealth (borrow from NLB), basically he is explaining why index fund is the way to go. Then you will have more understanding on why you want to do that.

To start with, easiest way is robo advisor with US ETF exposure. You can start from there and explore how to DIY along the way.

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