I finally opened up my first online brokerage account with Tiger Brokers ("Tiger") a few weeks back in February 2021. The trading fees is super cheap at only 0.08% per trade and currently, there is no minimum fees for SGX trading. This means that for every S$1,000 invested, one only need to pay 80 cents. The platform is relatively easy to use and familiarize. Tiger also allows one to buy into selected Unit Trust funds on Tiger Fund Mall. Going forward, I will be tweaking my current investment allocation and diverting a small portion of my future funds into buying overseas stocks for growth and diversification. However, the main focus of my investment approach will still be a dividend focused one.
1. Problems with online broker
(i) However, not all is perfect. For example, the claim by Tiger to be able to open and account and trade within the same day is actually not true. When I tried buying stocks on SGX, system keeps rejecting my trade. It turns out that the system will only open a sub-CDP tracking account when one initiates a first trade. The wait for me took almost 2 full days before I can start trading on the 3rd day.
(ii) The second issue is that the Customer service sucks. If you use the online chat, it can take you more than 2 hours to get through to ask for assistance or clarification.
(iii) The third challenge has to do with that the stocks purchased are not transferred into one's own CDP account but deposited into Tiger's CDP nominee account whereby your stocks are being held in custody. If you are those who always has a passion to attend AGM/EGM of listed companies, then you will be disappointed that you will not be able to sit in anymore. I am not sure whether one can write in to Tiger to ask to represent them for AGM/EGM attendance, but even if they allow, I guess this process maybe tedious.
2. Margin Trading- Tiger broker and Interactive Brokers
(i) I did not activate the Margin Trading account opening for Tiger because the interest rates for financing are 3.553% per annum and 4.07% for SGD and USD respectively which are higher than what Maybank Kim Eng is offering.
(ii) There was previously a recommendation by a kind folk (please look at the bottom comments section of my last portfolio updates post) to look into margin trading account by Interactive Brokers which offered the lowest interest financing rate in town of 1.553% and 1.57% for SGD and USD respectively. While the super low margin financing rate are damn attractive, note that unlike traditional brokers, in the event of margin call, Interactive Brokers do not allow time to add funds to your account or allow lead time to transfer stocks from CDP into their nominee account to avoid position liquidation. These are handled quite instantly and mercilessly based on some of the reviews.
3. Parting Thoughts
The substantial savings during trades using online broker is very attractive to me as a retail investor. Digitalization and IT advancement have reduced the role of a traditional stock brokerage firm. Depending on one's own requirements, it maybe good to maintain a mix of both traditional brokers and online brokers.
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