US Securities vs Sg Securities

[Simiishthis]

For a person residing in SG, what are the benefits and costs of owning US stocks over SG stocks and vice versa? I only know that liquidity is usually higher in the US compared to SG and they sometimes charge lower charges while in SG we get taxed lesser from dividends right?

 

[focus1974]

If you have more than $60,000 USD invested in US stocks, you need to do some planning.

I believe you get taxed >40% of your total value when you pass on.

So even if your $60K BECOMES $120K AND govt tax 40%. You get back, $84 only.

We have not talk about the withholding tax for dividends as well.

 

[Simiishthis]

Hmmm so if lets say a Us listed 100 dollar etf was purchased ans it goes up to 110 while playing 2 dollars in dividend...the stock was bought by a sgrean in sg. How much would the person expected to gain when selling it? How much difference would it make if It was a sg stock instead?

 

[lzydata]

For Singaporeans who buy US stocks, dividends are taxed at 30% - you don't have to pay the IRS because they automatically withhold them - but capital gains are not taxed.

 

[Epps_Sg]

Hmmm so if lets say a Us listed 100 dollar etf was purchased ans it goes up to 110 while playing 2 dollars in dividend...the stock was bought by a sgrean in sg. How much would the person expected to gain when selling it? How much difference would it make if It was a sg stock instead?

When selling the US ETF, difference is Singaporean:
Has to eventually pay extra bank forex charges to convert from USD back to SGD.
The actual dividend by the Singaporean will be $1.4 instead of $2 (30% dividend tax).
There is extra 40% Estate Duty Tax (if investor passed away) when investing more than $60k US Securities, as mentioned earlier.
There is additional forex risk, meaning the risk of losing money due to weakening USD or strengthening SGD.

On the other hand, Singapore is one of probably few countries where personal investment has very low or nil tax. For Singapore Securities:
There is no capital gains tax on investments upon selling.
No tax on interests received from bonds.
No tax on stock dividends.
Plus, there is no additional forex charges.
There is no risk of losing money due to weakening foreign currencies or strengthening SGD.

Personally I prefer to invest in SG securities where possible because the bulk of my spending will be using SGD later in my life.

If you buy from US market through local brokers (eg. dbsv, uobkh etc.) you pay more commission than using foreign brokers (eg. etrade, schwab etc.).

 

[Simiishthis]

Thanks for the great answer Epps Sg! But normally the us markets fluctuate more right? So the opportunities for gains and losses will be much more...

 

[peterchan75]

If you are refering to the fluctuation as in current day close vs previous close then SGX stock fluctuate more due to mainly penny stocks. Punters love penny stocks. US is bigger and thus it has better sector coverage.

 

[Epps_Sg]

Thanks for the great answer Epps Sg! But normally the us markets fluctuate more right? So the opportunities for gains and losses will be much more...

I can only say that it seems to me that the STI goes up higher and goes down lower than the U.S. S&P500.

 

[kpgyjan]

If the investor sell away the shares before he pass away, will he still be taxed the 40% estate duty? Say if before the investor die, he sell the shares, will the US taxman know he had passed away after that ? Does this 40% estate duty tax applies to foreign investors only or both US citizens & foreign investors ?

 

[Shiny Things]

If the investor sell away the shares before he pass away, will he still be taxed the 40% estate duty? Say if before the investor die, he sell the shares, will the US taxman know he had passed away after that ?

Maybe. If you've got the stocks or bonds when you flatline, you need to pay estate tax on them; if you've got cash in a US bank, you don't pay estate tax. (Cash accounts at non-bank institutions - like brokers - are fuzzy but probably taxable.)

Here's the relevant IRS FAQ:

"Executors for nonresidents must file a (US) estate tax return if the fair market value at death of the decedent's U.S.-situated assets exceeds $60,000."

So, IF you have more than $60,000 in Pear Computers or Las Vegas Overleveraged Casino Concern, AND IF you are over 65 or so, THEN maybe you should worry about US estate tax. Otherwise just hit the "buy" button and don't worry about it.

(Fun fact: "real property" is also included in that $60k. Your parents died and left you a $2 million penthouse in West Holllywood? Bring lube.)

Does this 40% estate duty tax applies to foreign investors only or both US citizens & foreign investors ?

US residents as well, but we get an exemption on the first $5 million of assets.

Seriously though, I am going to assume nobody in this thread is older than fifty or so. None of you are going to die in the next twenty years. Stop worrying about it and start investing.