Tiger Brokers – Making my first purchase in US Markets

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A week ago, I was ‘targeted’ by a Tiger Brokers Facebook Ad which indicated that their fees for SGX trading were 0.08% and that there were no minimum fees. Being a person always on the lookout for cheap deals, I was immediately attracted to the promotion and I ended up doing research on the brand, signing up for an account plus making my first purchase.

Before I continue, I would like to mention that I’m still a newbie when it comes to investing. I have yet to figure out my investment goals and to be honest I’m on a ‘try everything’ mode where I kind of try to take more action with smaller investments to ‘test and learn’. While I agree this is NOT the best option, I concluded that if you don’t make the first step, you might just never start on it. I am in no position to suggest what you should buy but I’m just sharing with you some learning points I discovered in my research process.

Since my return from New Zealand, I’ve been unemployed and apart from doing e-learnings online, I’ve started to manage my money by removing them from the safe but low interest savings account and trying out some other investment products. To date, I have parked some money in Singlife (2.5% interest for first $10K; very liquid) and Stashaway (current position is 9.62% for portfolio bought on 31 Mar; -1.41% for portfolio bought on 9 Jun).

Two weeks ago, I wrote an article about managing my finances, I mentioned that I was going to give FundSuperMart (FSM) a try as they had lower minimum fees ($10, instead of my usual $25 on iOCBC) but I’ve since given FSM a cold shoulder because Tiger Brokers has won me over with their lower fees. Within the week of signing up, I have already made a purchase on SGX and the US Market so here’s my story.

What is Tiger Brokers?

Tiger Brokers is an online stock brokerage (founded in 2014), which is listed on NASDAQ since March 2019. According to their website, they are backed by investments from Interactive Brokers Group (a reputable US-based brokerage firm) and XiaoMi (a Chinese electronics company which has been very popular in recent years). The app had been launched in Singapore back in Feb 2020 but it was only in Jun 2020, where they added SGX to their list of trading markets.

How Trustable is Tiger Brokers?

To be honest, when I downloaded the app (before researching), I didn’t realise that they were a China company as the developer’s name was Tiger Brokers (NZ) Limited and I had to double-check that I wasn’t in my NZ App Store account. After downloading the app, I saw that it has some Chinese text, and then I googled and found out that it was an app by China company with China founders. I apologize for the stigma but there had been a not-so-good reputation with China start-ups (especially with OBike, ofo and MilesLife) where they entered the market with a bang and then failed quickly and many people had their ‘deposits’ forfeited. So, I had to dig deeper into them.

Well, according to their website, they hold a proper license which means that they are regulated.

Tiger Brokers (Singapore) Pte Ltd (“Tiger Brokers”) holds a Capital Markets Services Licence under the Securities and Futures Act (Cap.289) to conduct regulated activities in Securities, Collective Investment Schemes and Exchange-traded Derivatives Contracts.

What is your risk?

Unlike the usual purchases via iOCBC/ DBS Vickers/ UOB Kayhian where the stocks you purchase are in your Central Depositary account (CDP), buying through Tiger Brokers (or FSM) means you are buying through a custodian account where you will not have the stock held under your name. You will not be invited to AGMs (you could, but it’s complicated) or have any rights to vote. Furthermore, should the custodian collapse, there might be a possibility you will not get your money back (or perhaps it will be a long process). The likelihood of custodians collapsing in recent years had been unheard of but just so you know, in these unprecedented times, anything is possible. Thus, it is recommended that you invest within your means and not take leverage. My assumption that if you bother to read my entry-level article, it means that you’re starting out, and borrowing money to invest is a huge no-no for me.

<Difference between CDP and Custodian accounts> a more detailed article by Seedly.

How Much Cheaper is Tiger Brokers (SGX)?

Based on my example below, Tiger Brokers fees are 4.41x cheaper than FSM, on the assumption that your investment per transaction is less than $12,500.

As of 15 June 2020, the commission for SGX trading via Tiger Broker was 0.08%, with no minimum fees. On the assumption that you’re doing entry-level investing (no min. 100K deposit or own premium accounts with banks), the next best alternative in the market was FSM which charges 0.08%, with a $10 min. charge per transaction.

In order to hit the $10 min. charge, you will need to invest at least $12,500 per transaction. If I were to make a $2,030 investment, my fees would have been $10.812 (0.53% of investment)

On the other hand, I recently made a 1,000 shares purchase of a $2.03 stock and my fees were only $2.44 (0.12% of investment).

Tiger Broker Fees = $2.03 x 1,000 x 0.08% = $1.624
SGX Trading & Clearing Fee* = $2.03 x 1,000 x (0.0075+0.0325) = $0.812

*SGX fees are payable on every single platform.

To be honest, I do have friends (and family) questioning my decision to make such small investments – like whether it was gonna be impactful in any way, but as I mentioned at the beginning, everyone needs to start somewhere and $2k is a sum that I am comfortable with.

How competitive are the Exchange Rates?

As I do not own any USD account, I opted to transfer my money via my SGD account (via FAST) (No extra fees for SGD to SGD fund transfer), and use their in-app exchange rate.

How much USD does 1 SGD sell for  SGD/USD
Xe.com 0.716414
Tiger Brokers 0.7142
FSM (live rates) 0.714766

*Rates as at 5:52 PM, 15 June 2020

In case you have trouble in understanding the table (I always do), the higher the number is better as it means that your 1 SGD is worth more USD dollars. From the table above, it seems that FSM has a more competitive rate but the difference is rather minimal ($0.566 for every $1,000).

Another thing to note is that the exchange rate that you see on Tiger Brokers’s app is only indicative (final rate may differ after order is completed) whereas the rate for FSM refreshes every minute.

(Update 19 Jun 2020)

When I was doing an exchange, they showed me an indicative exchange rate of 1 SGD = 0.7157 USD but after the transaction of approved, the rate dropped to 1 SGD = 0.715307105 USD

Seems like there’s a slight discrepancy of 0.393 USD per $1,000 SGD. (It seems pretty negligible for me as I’m not making big transfers but I guess it could be significant for big players.)

How Much Cheaper is Tiger Brokers (US Market)?

Similar to the SGX Market, FSM charges 0.08% or min. USD 10. This also means that I need to do a minimum investment sum of USD 12,500 in order to not ‘lose out’ on the fees.

Let’s see how Tiger Brokers fare in this area. As of 15 June 2020, they are charging US$0.01/share or min. $1.99 USD.

To be honest, I’m not sure about the rationale (aside from trialing) behind this purchase of a rather expensive stock at USD $116. It is a very reputable company and I do enjoy their products, so I decide to do a bit of ‘support’ by buying in a small quantity of.. 20 shares.

FYI: In Singapore, you need to buy at least 100 qty of each share but in the US market, the MOQ is just 1.

Tiger Broker Fees = $1.99 + 7% GST

For my investment of $2,320, I’m paying $2.1293 worth of fees (0.0917% – cheaper than SGX). If I were to make the same investment on FSM, I would have to pay $10.70 for the fees.

So.. What’s the Catch?

Based on my preliminary findings and two trade experiences, the low trading fees are really attractive, compared to any other custodian brokerage firms with NO ENTRY BARRIERS (min. investment funds or etc.).

Since Tiger Brokers just entered the Singapore market, it is likely that they are on an aggressive aim to capture market share. It is highly likely that the fees will be adjusted once their KPI is met so.. why not take the chance to jump in NOW and learn about investing?

Prior to finding out about them, I was keen, yet hesitant about entering the US Markets as the min. $12.5k USD investment (to make sense of fees) on one stock sounds like a huge risk for me. Now, I am able to diversify that $12.5k to invest in 4 to 5 different companies and spread out the risk in this uncertain future.

Fees are cheaper in US Market vs SGX

Most of the time, if you’re looking at % of fees to investment value, the fees to buy/sell in the US market is relatively cheaper than SGX. That being said, the volatility of US market is pretty crazy and it can peak and fall multiple times a day. Furthermore, to monitor the US market (which starts at 9:30pm and closes at 4am), you might be living on hours that are unsuitable for your day job.

Most people would recommend purchasing US stocks as a long term investment for capital appreciation (as we are non-citizens and do not have to pay capital gains tax) but assuming that you’re in for a dividend strategy, please note that you will be charged 30% withholding tax for your dividends.

Easier said than done, but try to do your own research and make your own judgment. At the end of the day, we only learn from making mistakes.

How easy is it to use the App?

  1. The signup process was pretty seamless and you’re able to use SingPass to fill up the information. When I signed up last week (11 Jun 2020), my account got approved within 1 minute. Like all investment accounts, you will be required to upload your identification documents (NRIC) and a proof of address (I used my phone bill).
  2. <Video on how to deposit funds>
    This step is a little troublesome as apart from making the fund transfer, you will still have to submit a form to inform them of the deposit AND upload a screenshot of the transaction. It took about 2 hours before I see the money in my account. According to their website, you may be able to use PAYNow Corporate in the near future.
  3. Practice buying/selling using their ‘Paper Account’
    If you’re not comfortable with using real money from the start. You can use their practice account (100,000 USD) to get comfortable with the interface. You will be able to practice buying and selling of stocks. One thing to note is that you should always double-check to see if you’re trading in the correct account before you submit your buy! The interface looks the same, just the ‘text’ is different (Paper Account vs Prime Account) so you got to be extra cautious!
  4. Withdrawal of Funds
    I have not done so but according to the T&C indicated, there will be no charges if you’re withdrawing SGD to your SGD account. However, if you’re withdrawing USD, there is an estimated 5USD charge by your bank. According to the website, it will take 1-2 days for the withdrawal process. I have not done it yet so I’m unable to verify their lead time.

*On a side note, they do have a desktop application that you can download and install on your computer. It looks pretty fancy and looking at it somehow makes me feel more ‘powerful’ but I haven’t played around enough to discover its wonders. So for a start, I’ll remain on the mobile app.

Where to find the key buttons

Deposit/Withdraw Money: Bottom Bar, click on ‘Me’, under My Accounts, click on ‘Capital Accounts’. You will be able to access the ‘Fund Deposit’ and ‘Withdrawal‘ button from this screen.

Clicking on ‘Trade’ will show you your current holdings and you can toggle between your ‘prime account’ and ‘paper (practice) account’  in this screen.

Attractive Signup Bonus

They are very aggressive in their signup bonus (with referral code).

Tiger Brokers Referral Code

For new users, you will be getting:

  1. Level 2 Data for US Stocks (30 days) 
    • Level 2 is a generalized term for market data that includes the scope of bid and ask prices for a given security. Also called depth of book, level 2 includes the price book and order book, listing all price levels of quotes submitted to an exchange and each individual quote.
      (Not to worry if you don’t get this, you will get 30 days to figure it out and I’m still not there yet =p)
    • Most brokerage firm offers this data as a paid service or it is a premium service that you can get once you hit a certain level of investment amount. To provide this for an entry-account user kind of gives me the motivation to analyze my stocks further.
  2. Commission-free for 1 order of US&HK stocks in 30 days
    • I have no idea how this works but I have yet to receive any rebates on my commission fees for the first stock I bought. I will update again when I figure this out.
  3. Fund your account to get free Stock Voucher
    • SGD  2-5k : Receive Stock Voucher worth SGD 30
    • SGD  5-10k : Receive Stock Voucher worth SGD 50
    • SGD 10-30k: Receive Stock Voucher worth SGD 70
    • SGD >30k: Receive Stock Voucher worth SGD 100
    • If you have the capacity, you should aim for a higher stock voucher value when you deposit your first funds.
      As I was just ‘trying out’, I only made a small initial deposit and received the SGD 30 Stock Voucher. Even though I eventually increased my deposits, I was no longer entitled for the higher value voucher.
    • As to how the voucher works, you’re supposed to receive the amount ‘deposited’ into your account within 10 days of your first purchase.
      Note: I made my first purchase on 12 June and I received my SGD 30 Stock Voucher on 22 June.
      They sent me an SMS informing me that the cash rebate has been credited to my account.

If you need a Tiger Broker Referral Code, here’s my Referral Code: NEWACC

Link to signup: https://www.tigersecurities.com/accounts?invite=NEWACC

Disclaimer: By using the promo code above or signing up through the link, I may be entitled to gain additional stock vouchers from your successful referral. I would be very appreciative if you use my promo code as a way to support me!

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Apologies if this post seems incomplete as I’m still new to financial blogging.

I’m still pretty uncertain about who will end up on this page but thanks for reading through till the end! If you have any questions, feel free to comment below and I’ll see if I can answer though I don’t consider myself financially savvy at this point in time, but I guess this is a starting point for me!

Hope that this post will somehow motivate you to start some investments too!

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  • Thanks for this blog post. Such a great timing bcos my neighbour and I have been talking about investing in US shares since the lockdown. Here in JB, it’s already almost a month since I applied for my brokerage account with a bank, yet to be approved due to high volume of new account opening. In the end I also turned to custodian based Rakuten Trade but it can only trade in Msia shares. All the best in your investment journey!

    • Wow you’re really fast in dropping a comment! I’m not familiar with the options in Malaysia so I’m unable to compare if this is the best option for you but I think there’s a possibility that you may be able to set up an account. I do see one malaysia bank as an option for funds deposit: https://www.tigerbrokers.com.sg/help/detail/rjlc but I’m not certain if the exchange rate would work in your favour. But oh gosh, having to wait a month of a brokerage account definitely sounds very slow!!

  • I enjoyed your article. I am starting out with Tiger broker. Can I ask do you know if later on, we need to transfer our shares out of Tiger to say another broker locally, what would be the charge?

    • Hi there. I’m not familiar with transferring shares out of custodian accounts but I found this information on their website and it seems that they do not support transfer out for Singapore market (yet).

      Q:What is the transfer-out fee for securities?
      A:USD100 per share for transferring out U.S. stocks. HKD500for transferring out H.K. stocks. Currently we do not support Singapore stocks transfer out.