Choosing an online brokerage in Singapore : 7 things to look out for

Did you miss the rally of the decade?

Covid19 pandemic had led to several extraordinary measures. From Circuit Breakers to mass layoff of employees, it has presented many twists and turns. During this turbulent period, opportunities had arisen. Online sales had picked up, grocery supermarkets are doing brisk business, stock markets have seen a sharp drop followed by a massive record-breaking rally with US markets leading the charge with the best 50-day rally in history.

The latter presented an opportunity for those looking to get into new investments. With more people working from home, there will be more time for one to monitor the markets. With interest rates falling to below 1% and unable to keep up with inflation, investing into equities, currencies and bonds would be an ideal alternative for one who would like to make their money work harder for them. 

Picking an Online Brokerage

Source: MoneySmart

For those who had been in the market, it would have been easy to execute a trade with their existing brokers. For those who are new to investment, often the first step they would do is to pick a brokerage. With today's technology, picking an online brokerage would be the ideal way to start the investment journey. 

However, the process can be more intimidated than one expects.  For someone who is looking to open an account, it would be best to check out what the various online brokerages can provide in terms of funding required and the cost of making a trade. Instead of individually checking each brokerage,  one could use MoneySmart Online Brokerage Comparison Tool to aggregate and compare all the online brokerages together, in order to find the best one that fits their investment needs.

Source: MoneySmart

MoneySmart also sorts the online brokerage out by types of investments for those who are looking for a specific investment when choosing an online broker. The list includes brokerages that allow investing in Singapore or overseas market.

What to look out for

To make the decision making simpler, here are some pointers to look out for when choosing an online brokerage

1 Reputation

First and foremost, choose a reputable brokerage firm, preferably one that has an operation in Singapore for a period. To start any trade, one would usually need to place funds with the brokerage to trade. Finding a reputable firm would mean you can sleep soundly knowing your funds are secured. Reputed brokers also ensure that withdrawals and deposit of funds are fuss-free.

Beware of unregulated online platforms that are located outside of Singapore as they are prone to fraud. Should any issue arise, you would find it much harder to make any claims

2 Platform

Look for a brokerage that offers a variety of platforms. For a beginner, an ideal platform should include desktop and mobile trading. This would allow one to trade or monitor positions on the go. The trading platforms should also have a user-friendly interface that would be easy to learn and use.

3 Charges and Fees

Commission charges for stocks and forex are important. For those with a minimum commission, you would have to trade a certain volume to make it worthwhile. Otherwise, you might end up on the losing end because all your profits are used to paying commissions.

4 Reliability

There are some brokerages that have problems with a reliable server when markets are volatile. From experience, the server might even crash during the crucial period. When this happens, your trades would not go as plan and it may cost you a pretty penny.

Do read up on forums to check if there are such issues for the brokerage you choose.

5 Charting Tools

Charts are essential for trades. A decent brokerage would offer free charts with technical indicators for you to monitor your trades.

6 Market Updates

Some brokerages provide market updates for traders to have an overview of the markets and directions. If you are choosing a brokerage firm, ask if they do provide complimentary market updates.

7 Support 

Finally, it would be great if you have a relationship manager to liaise with on the account. For those who only provide generic phone support, it may be quite a while before your issue is resolved. In trading, missing a few hours or a day is as bad as losing potential income for the day.

For a list of brokerages operating in Singapore, MoneySmart provides a decent summary of where you could open your first online brokerage account. Use it to embark on your investment journey.