You might already know that exchange-traded funds (ETFs) are basically a basket of stocks combined into one fund.
These funds are attractive because they provide diversification across sectors and companies.
They also offer lower costs than buying individual securities.
However, many of our readers come to us asking about how they can buy ETFs in Singapore.
Be it if you want to buy a U.S. ETF, Chinese ETF, or even a Singapore ETF, this guide is for you.
Step 1: What ETFs do you want to buy?
Before you can even begin to purchase an ETF, you’ll need to know what ETFs you’re looking to buy.
Are you looking for US ETFs?
Are you looking for China ETFs?
Or are you looking for Singapore ETFs?
Note down every single ETF that you’re looking to buy, the stock market it’s in, and in what proportions you’re looking to buy them.
This will help you in the next steps.
Step 2: Where can you buy these ETFs?
The simple answer is that you can buy ETFs through a brokerage account.
However, this depends on where these ETFs are listed.
Are they in the Singapore Stock Exchange, Hong Kong Stock Exchange, New York Stock Exchange, or the Nasdaq?
Once you know where to purchase the ETFs from, you can begin selecting the brokerage accounts based on the exchanges and markets they offer.
If you’re going to be trading frequently, in large volumes, and don’t mind managing multiple broker accounts, then going for the lowest cost options might be best.
However, if you prefer the convenience or don’t want to mess around too much, prioritise an investment platform that offers the markets you need and then choose the one with the lowest fees.
Don’t just look at the trading fees and commissions, watch for inactivity fees, minimum trade value and amounts, and withdrawal fees.
It’s best to do your research on which of these have the lowest OVERALL fees, not just the trading fees.
We have a guide on the best brokerage accounts in Singapore to help you with this selection.
Step 3: Sign up for the brokerage account and complete KYC
Once you’ve decided on a trading platform, sign up for an account and complete the Know-Your-Customer (KYC) verification.
Financial institutions implement this step so that they know you’re an actual person and that the funds belong to you.
Should anything happen, your funds can be identified to be yours.
This also helps prevent criminal activities – but I digress.
There will also be a Customer Knowledge Assessment – an assessment mandated by the MAS to protect and ascertain that investors know what they’re doing.
It’s best that you answer these questions truthfully.
If you’re not confident, you can always engage a financial advisor to invest for you.
Step 4: Top up your accounts
Different platforms have different sign-up processes so I’m not going through them all, but in general, once KYC is completed, you’ll need to top up your account.
This is usually fairly straightforward as most local brokers will accept FAST, PayNow, GIRO, and even bank transfers.
The transfer process will take a few hours to a few days to complete, so do make sure to check if there are any integrations with local banks that allow for quick fund transfers.
My experience with topping up from my DBS account to moomoo and Tiger Brokers were quick and easy – I got my funds within an hour!
Step 4: Convert your currency
If you’ve topped up your account with the same currency to purchase the ETFs you want, you can skip this step.
However, most of us only do the conversion within the brokerage account itself due to convenience or better rates.
Some platforms offer interbank rates, which would give you better rates than you can get elsewhere anyway.
That’s why selecting a good broker is important as you ensure that you get the most convenience at the lowest costs.
So if you’re looking to invest 50% in the U.S, 30% in China, and 20% in Singapore, make sure that you change your SGD to USD and RMB accordingly.
Knowing your proportions earlier and how much money you’re willing to invest helps prevent unnecessary exchange rate losses.
Step 5: Search for the ETF and place a buy order!
Once your currencies have been converted, you can search for the ETF using the search function provided.
If you’re looking for the Vanguard S&P500 Index Fund, you can either type the full name or the ticker – VOO.
Perhaps the SPDR Straits Times Index?
Same thing, type the full name or the code – ES3.
Once you found the ETF, you can set a buy order.
This can be done either through a limit or a market order.
Generally, I prefer using limit orders as I know exactly how much I’m paying for the ETF. This means that the order will only execute if it hits the price I set or is lower.
This may sound good, but it doesn’t guarantee that I will purchase the ETF at that price.
If you prefer to buy the ETF immediately, you can consider getting a market order.
A market order guarantees that you buy the ETF, but the price might not be the price you set it at due to the fluctuating prices.
So fixed price but no guarantee the order will be executed = limit order.
While guaranteed order execution but the price might fluctuate = market order.
You make the choice.
Once you’ve selected the order type, the price you want to buy your ETFs for, and the quantity, click on “Buy” and then “Confirm” your purchase.
Step 6: That’s it!
Once your order goes through, your purchase is final!
You can sit back and wait for your ETF to increase in value and make additional monthly investments along the way.
Our Brokerage Choice
The team at Dollar Bureau has a preferred choice when it comes to brokerages.
When investing, we mostly look at the US and Chinese markets. Therefore it’s important that our selection allows us to purchase stocks and ETFs in these markets.
We also prefer the convenience of only using 1 brokerage account, instead of the hassle of managing different ones.
That’s different passwords, trading codes, top-ups, and processes to take note of.
Based on our research, we’ve selected moomoo by FUTU as our trading account of choice.
moomoo provides us access to US, China, and even Singapore markets (for the occasional trade) for us to invest in at the lowest fees amongst its competitors.
And because it’s our platform choice, we’ve partnered with them to give you exclusive benefits.
When you sign up using our link and make an initial deposit of $2,700, you’ll get a free Apple share, stock vouchers, commission-free trading, and trading coupons!
This is a great way to get started (or to get free stuff) when you’re thinking of purchasing an ETF!
Interested in this deal?
Grab it here: https://www.moomoo.com/sg