S&P 500 Index Fund

[GreenTeaIceCream]

hi guys, a total newbie here planning to buy s&p index fund for the long term

I'm not sure which broker I should use to purchase the fund so would need some advice from the knowledgable people here.


Should I just use
1) Singapore-based US brokers (I have a vickers acct that allows me to trade US),

2) US-based online brokerages that doesn't have any local office here (I think they have the lowest fee?)

3) Singapore-based US brokers like etrade

 

[Shiny Things]

hi guys, a total newbie here planning to buy s&p index fund for the long term

I'm not sure which broker I should use to purchase the fund so would need some advice from the knowledgable people here.


Should I just use
1) Singapore-based US brokers (I have a vickers acct that allows me to trade US),

2) US-based online brokerages that doesn't have any local office here (I think they have the lowest fee?)

3) Singapore-based US brokers like etrade

None of the above.

If you're a Singaporean investor and you want to buy an S&P 500 index fund, you want to buy one that's listed in the UK, not the USA. (Why? Because you get taxed at a lower rate on the dividends if you buy the UK-listed version - 15% vs 30%, which means about an extra 0.3% per year of cash in your pocket.)

So the one you want is VUSD, listed in the UK on the LSE (it's listed in US dollars), and you probably want to buy it using Stanchart (if you're doing less than $1,000 a month). Stanchart's FX spreads are wide, but its brokerage is rock-bottom cheap - every other broker has a huge minimum fee for US- or UK-listed stocks.

If you're doing more than $1,000 a month, it's worth opening up an Interactive Brokers account - they give you better FX rates and cheaper brokerage rates, but they charge a $10/month fee if you have less than $100k in your account.

Don't use Vickers - they charge too much. Don't use ETrade - they don't give you access to the tax-advantaged UK versions. Use Stanchart for less than $1k a month; Interactive Brokers for more than $1k a month.

 

[GreenTeaIceCream]

None of the above.

If you're a Singaporean investor and you want to buy an S&P 500 index fund, you want to buy one that's listed in the UK, not the USA. (Why? Because you get taxed at a lower rate on the dividends if you buy the UK-listed version - 15% vs 30%, which means about an extra 0.3% per year of cash in your pocket.)

So the one you want is VUSD, listed in the UK on the LSE (it's listed in US dollars), and you probably want to buy it using Stanchart (if you're doing less than $1,000 a month). Stanchart's FX spreads are wide, but its brokerage is rock-bottom cheap - every other broker has a huge minimum fee for US- or UK-listed stocks.

If you're doing more than $1,000 a month, it's worth opening up an Interactive Brokers account - they give you better FX rates and cheaper brokerage rates, but they charge a $10/month fee if you have less than $100k in your account.

Don't use Vickers - they charge too much. Don't use ETrade - they don't give you access to the tax-advantaged UK versions. Use Stanchart for less than $1k a month; Interactive Brokers for more than $1k a month.

Hi Shiny,

Say I want to dump in a lump sum, rather than monthly, standchart will be the one right.

And as for Interactive brokers, the 100k includes the amount invested?

 

[GreenTeaIceCream]

None of the above.

If you're a Singaporean investor and you want to buy an S&P 500 index fund, you want to buy one that's listed in the UK, not the USA. (Why? Because you get taxed at a lower rate on the dividends if you buy the UK-listed version - 15% vs 30%, which means about an extra 0.3% per year of cash in your pocket.)

So the one you want is VUSD, listed in the UK on the LSE (it's listed in US dollars), and you probably want to buy it using Stanchart (if you're doing less than $1,000 a month). Stanchart's FX spreads are wide, but its brokerage is rock-bottom cheap - every other broker has a huge minimum fee for US- or UK-listed stocks.

If you're doing more than $1,000 a month, it's worth opening up an Interactive Brokers account - they give you better FX rates and cheaper brokerage rates, but they charge a $10/month fee if you have less than $100k in your account.

Don't use Vickers - they charge too much. Don't use ETrade - they don't give you access to the tax-advantaged UK versions. Use Stanchart for less than $1k a month; Interactive Brokers for more than $1k a month.

And thanks, been starting to read up on the things you have been sharing, really insightful for a super newbie like me.

 

[zacattack]

Hmmm. TS, just a random thought.

Why not look to trade The S&P index futures (ES)?

 

[GreenTeaIceCream]

Hmmm. TS, just a random thought.

Why not look to trade The S&P index futures (ES)?

I'm basically a newbie into trading stocks. But I will look into what that is and read more about it.

From your point of view, why do you suggest it? Hope you don't mind to share

 

[Shiny Things]

Hmmm. TS, just a random thought.

Why not look to trade The S&P index futures (ES)?

Because he's looking to buy and hold - he doesn't want to have to roll his position every three months. (Also because he's a brand new investor, and new investors shouldn't go anywhere near futures.)

 

[1nd3x1nv3stor]

Hi Shiny,

Say I want to dump in a lump sum, rather than monthly, standchart will be the one right.

And as for Interactive brokers, the 100k includes the amount invested?

Assuming for SC: Brokerage fee is 0.2% and the exchange rate loss is 1%, then the breakeven will be:
($10 x 12) / 1.2% = $10,000

If you invest more than 10k per year, then use IB.

100k is the total of your investment value and cash at IB.

Hope this helps.

 

[limster]

Could I check what is the brokerage commission for IB buying LSE shares as I may seeing the wrong page.

When I go to fixed pricing structure, they say the minimum commission is 6 GBP

When I go to tiered pricing structure they say the commission is 0.45%

Both seem higher than SCB in the sense that I like to make small trades with about 1 GBP commission per trade even though my total trades each month is more than $1k (eg: divided my purchases among 3 ETFs).

 

[PostCountWarrior[+1]]

Hmmm. TS, just a random thought.

Why not look to trade The S&P index futures (ES)?

i use this. plus it allows leverage. dun leverage too much. borrow 50% and hold long term shld be fine.

 

[Shiny Things]

Could I check what is the brokerage commission for IB buying LSE shares as I may seeing the wrong page.

When I go to fixed pricing structure, they say the minimum commission is 6 GBP

When I go to tiered pricing structure they say the commission is 0.45%

Both seem higher than SCB in the sense that I like to make small trades with about 1 GBP commission per trade even though my total trades each month is more than $1k (eg: divided my purchases among 3 ETFs).

Fixed: GBP 6 minimum for GBP-denominated stocks; USD 5 minimum for USD-denominated stocks.

Tiered: 0.08% (not sure where you got 0.45% from?)

 

[limster]

Fixed: GBP 6 minimum for GBP-denominated stocks; USD 5 minimum for USD-denominated stocks.

Tiered: 0.08% (not sure where you got 0.45% from?)

Thanks, I saw the wrong category, "United Kingdom - EUR, GBP and CHF Denominated Products External Fees" is 0.45%, and "UK Tiered" is 0.08%. Looks good.

 

[Shiny Things]

Thanks, I saw the wrong category, "United Kingdom - EUR, GBP and CHF Denominated Products External Fees" is 0.45%, and "UK Tiered" is 0.08%. Looks good.

Aha, righto. I think the "external fees" line is the stamp duty that gets slugged on purchases of non-ETF UK-listed stocks.

 

[zacattack]

I'm basically a newbie into trading stocks. But I will look into what that is and read more about it.

From your point of view, why do you suggest it? Hope you don't mind to share

Hmmm. Well, I just feel that it is more accessible in the sense that the amount per tick is lower and there's a lower margin requirements. Also there are lower commissions paid. But like Shiny Things mentioned, you're looking to buy and to hold. And as you are new, you would want to stay away from all these derivatives. The ES is basically using the SP500 as it's underlying.

Both are good though, just one single chart to monitor imo. I am not a pro, i hope to be there one day. But for now, i feel the most comfortable with ES and the SPX is abit ex for me. just my 2 cents

 

[zacattack]

i use this. plus it allows leverage. dun leverage too much. borrow 50% and hold long term shld be fine.

If you dont mind me asking sir, which broker are you using? I'm currently with TD TOS. Wondering if there's a better one out there? Thank you!

 

[the_gryffindor]

If it's just SP500, what about the one by Vanguard HK? Tracking the same instruments and no withholding tax in HK.

 

[limster]

If it's just SP500, what about the one by Vanguard HK? Tracking the same instruments and no withholding tax in HK.

Please find out:
(1) TER
(2) bid-offer spread
(3) Average daily volume
(4) How much tax the HK-listed ETF withheld in the last annual report vs dividend income.

and report back here with your findings to benefit us

 

[ston12345]

Please find out:
(1) TER
(2) bid-offer spread
(3) Average daily volume
(4) How much tax the HK-listed ETF withheld in the last annual report vs dividend income.

and report back here with your findings to benefit us

is this the 3140 we're talking about here? I'm gonna try answering those questions cause I've been spoonfed by this forum thus far

(1) TER: .25%
(2) bid-offer spread
(3) Average daily volume: 31,400 on 9/7/15
(4) How much tax the HK-listed ETF withheld in the last annual report vs dividend income: no annual report yet.

Seems like this etf is a pretty new etf? it's only listed on 21/05/2015!

VG HK SP500 ETF

 

[limster]

is this the 3140 we're talking about here? I'm gonna try answering those questions cause I've been spoonfed by this forum thus far

(1) TER: .25%
(2) bid-offer spread
(3) Average daily volume: 31,400 on 9/7/15
(4) How much tax the HK-listed ETF withheld in the last annual report vs dividend income: no annual report yet.

Seems like this etf is a pretty new etf? it's only listed on 21/05/2015!

VG HK SP500 ETF

The TER and volume seems be a good enough reason not to get the HK version.

 

[Shiny Things]

If it's just SP500, what about the one by Vanguard HK? Tracking the same instruments and no withholding tax in HK.

There's no withholding tax in HK, but I think someone else in some other thread did the research on this one: it turns out it pays the full 30% tax slug on its dividends, but it pays them at the ETF level. So the tax slug is still there; you just don't see it. The UK-listed versions are still better.