If I want to start investing in the US market, what is the minimum I should put in to get returns? Is there withholding tax involved? - Seedly
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Michelle

Asked on 14 Apr 2020

If I want to start investing in the US market, what is the minimum I should put in to get returns? Is there withholding tax involved?

What are some costs that I should be aware of?

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Jacob
Jacob
Level 6. Master
Answered on 18 Apr 2020

Hi Michelle, it's nice to know you're looking to kickstart your investment journey. On top of what has already been mentioned, specifically for ETFs, you could also consider Irish domicilied ETFs. They are more cost efficient with their 15% withholding tax on dividends, compared to 30% for those listed in US.

Examples of these ETFs listed on LSE include:

  • CSPX - iShares version

  • VUSA - Vanguard version in GBP

  • VUSD - Vanguard version in USD

  • VUAA - similar to VUSD, but the dividends are reinvested automatically instead of being paid out. This would be useful if you are looking to invest for the long term.

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Sudhan
Sudhan
Level 6. Master
Answered on 17 Apr 2020

Hi Michelle, there's no hard-and-fast rule on this. It all depends on your comfort level.

I like to keep the commission fees to around 1% of the investment capital. For example, if the commission is $10, I would like to invest at least $1000 to make it worthwhile.

Yes, there's a 30% dividend withholding tax involved. Other costs will depend on the broker such as custodian fees, etc.

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Wilson Nid A Break
Wilson Nid A Break
Level 9. God of Wisdom
Answered on 16 Apr 2020

30% wht.

The minimum lot you had to buy is one stock.

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Su Jun Hao
Su Jun Hao, Student at Accounting & Finance, Temasek Poly
Level 4. Prodigy
Answered on 16 Apr 2020

The beauty of the US stock market is its low fees and low minimum investment.

Ill say $500-600 (2x SPY) to start is the minimum.

If your a bit lower, consider evaluating a company on your own, and put your entire capital (300-500?) in it.

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