How to invest in US stocks? sub-brokerage, and fintech

invest in US stock

Disclaimer: I have no interest connection with any company mentioned in this article. This article is purely my personal experience and opinions and is for reference only.

If you want to invest in US stocks, here are the ways:

  • The first way: open an account with a Taiwanese brokerage, and then specify that you want to open the function of sub-brokerage trading of US stocks.
  • The second way: open an account directly with an online brokerage in the United States.
  • The third type: open an account directly with fintech companies in the United States.

Sub-brokerage

The most convenient way for Taiwanese investors to participate in U.S. stocks is to go to the Taiwan brokerage where you opened an account, and ask for the function of sub-brokerage for you. By the way, according to the data at the end of 2020, more than 2 million Taiwanese have opened sub-brokerage accounts with Taiwanese brokerage firms to invest in overseas stock markets, and there has been an accelerated growth in recent years.

The following is a comparison table between Taiwanese sub-brokerage and U.S. online brokerages:

Taiwanese sub-brokerage U.S. online brokerages
Wire fund to USNot requiredRequired
Fund exchanged to U.S. dollars Required Required
Remittance feeNoTaiwan banks: NT$ 700+; U.S. online brokerages US$ 25
Quotation and trading order synchronization2 to 3 minutes delayedReal-time
Fee and commission0.5% and above, US$ at least0
Credit (margin and shorting)Usually noYes
GovernanceTaiwan Financial Services AssociationUS SEC

U.S. online brokerages

As stated in sections 1-6 of my book “The Rules of Super Growth Stocks Investing”, online brokerages in the United States are now extremely competitive. Below is a comparison table of the two most famous online brokerages in the United States. Sources: Charles Schwab, Interactive Brokers.

 Charles SchwabInteractive Brokers
Customers (2020)29629000, including TD Ameritrade1.073,000, non-individuals account for 43%
Asset Under Management (2020)US$ 6.6917 trillionUS$ 288.6 billion,non-individuals account for 64%
Number of Transactions (2020)655,855,200704,278,000
Contacts and Shares TradedNot availableOptions contracts 624,035,000, future contracts 167,078,000, stock 338,513,068,000 shares
Monthly Fee0UD$ 20 if below US$ 3,000,UD$ 10 if below US$ 10,000
Trading Fee0US$ 0.005 per share, US$ 1 at least
Minimum Account BalanceUS$ 25000None
Margin Rate6.825% ~ 8.575%1.45% ~ 2.66%
Trading Non-US StocksNoYes
Other ServicesBanking and wealth management servicesAlmost all derivatives, Forex
Mandarin Telephone ServiceYes for U.S. and Hong Kong OfficeNo for U.S. and Yes for Hong Kong Office
Online Instant Chat ServiceNoYes
Chinese User InterfaceYesYes
Other fee or commission0All services are chargeable
Debit CardYesNo
Online account opening serviceNoYes
SpecialtyThe largest U.S. online brokerU.S. most professional broker
User ExperienceClean, easy to pick upComplicate, hard to use

As mentioned earlier, the competition among online brokerages in the United States is very fierce, and transaction commissions have almost all been cut to zero, with few exceptions. Interactive Brokers (ticker: IBKR) in the above table is one of the few well-known brokerages that still charge handling fees among the online brokerages. Except that the handling fee is almost zero, the big difference between them is the minimum account balance for opening an account, that is, the minimum amount of stocks plus cash in the account.

invest in US stock
credit: Pixabay

Fintech

The competition among new fintech firms in the United States is fiercer than that of online securities firms in the United States, and stock trading is usually only a small part of their business. The trading commissions of new financial technology companies in the United States are almost zero, and most of them do not have a minimum account balance requirement. In order to attract you to open an account, some give away stocks as incentive. For example, in 2021, SoFi (ticker: SOFI) will open an account and give away a share of Coca-Cola (ticker: KO) stock.

Some famous fintech are listed below:

Disclaimer

  • The content of this site is the author’s personal opinions and is for reference only. I am not responsible for the correctness, opinions, and immediacy of the content and information of the article. Readers must make their own judgments.
  • I shall not be liable for any damages or other legal liabilities for the direct or indirect losses caused by the readers’ direct or indirect reliance on and reference to the information on this site, or all the responsibilities arising therefrom, as a result of any investment behavior.
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