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.
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 US||Not required||Required|
|Fund exchanged to U.S. dollars||Required||Required|
|Remittance fee||No||Taiwan banks: NT$ 700+; U.S. online brokerages US$ 25|
|Quotation and trading order synchronization||2 to 3 minutes delayed||Real-time|
|Fee and commission||0.5% and above, US$ at least||0|
|Credit (margin and shorting)||Usually no||Yes|
|Governance||Taiwan Financial Services Association||US 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 Schwab||Interactive Brokers|
|Customers (2020)||29629000, including TD Ameritrade||1.073,000, non-individuals account for 43%|
|Asset Under Management (2020)||US$ 6.6917 trillion||US$ 288.6 billion,non-individuals account for 64%|
|Number of Transactions (2020)||655,855,200||704,278,000|
|Contacts and Shares Traded||Not available||Options contracts 624,035,000, future contracts 167,078,000, stock 338,513,068,000 shares|
|Monthly Fee||0||UD$ 20 if below US$ 3,000，UD$ 10 if below US$ 10,000|
|Trading Fee||0||US$ 0.005 per share, US$ 1 at least|
|Minimum Account Balance||US$ 25000||None|
|Margin Rate||6.825% ~ 8.575%||1.45% ~ 2.66%|
|Trading Non-US Stocks||No||Yes|
|Other Services||Banking and wealth management services||Almost all derivatives, Forex|
|Mandarin Telephone Service||Yes for U.S. and Hong Kong Office||No for U.S. and Yes for Hong Kong Office|
|Online Instant Chat Service||No||Yes|
|Chinese User Interface||Yes||Yes|
|Other fee or commission||0||All services are chargeable|
|Online account opening service||No||Yes|
|Specialty||The largest U.S. online broker||U.S. most professional broker|
|User Experience||Clean, easy to pick up||Complicate, 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.
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:
- Block (ticker: SQ): Suggest you refer to my blog post “You should know the company Square (rebraned to Block)“
- Robinhood (ticker: HOOD)
- PayPal (ticker: PYPL)
- SoFi (ticker: SOFI)
- eToro (ticker: FTCV)
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