Interactive Brokers is one of the best international brokers out there for Singaporeans, with one of the lowest commission fees at just 0.005 USD/share or a minimum of 1 USD per trade. Here at Investing For Two, we recommend this broker for Singaporeans looking to trade international shares. If you would like a more comprehensive comparison between the many brokers available to make sure that Interactive Brokers is really the best choice for you, click here.
If you have decided to use Interactive Brokers, read on to find out how to open an account! Additionally, if you would like to support us without any extra cost to you, click here to open an account using our referral. Thank you!
What You Need
Before we get started, there are three things that you need to prepare:
- PDF or JPEG of proof of your identity and date of birth
Passport, National ID, Driver's License, Alien Identification Green Card
- PDF or JPEG of proof of your address
Bank Statement, Brokerage Statement, Homeowner's or Renter's Policy, documents & bills, Security System Bill, Government-Issued Letters, Utility Bill, Current Lease, Evidence of Ownership of Property, Driver's License
- Details of your funding bank account
Bank Name, Bank Account Number
And most importantly... money to fund your account and begin your investment journey! (:
Setting Up An Account
First, click here to go to Interactive Brokers' website (through our referral 😇). We will be opening an individual account today, which is suitable for individual investors like you and me.
Fill in your details and click "Create Account".
You will then be asked to verify your email. Simply go to the email you provided and click the link in the email that Interactive Brokers sent you.
Once your email has been verified, you will be brought to a page where you will have to log in again to finish your application. Click on the drop down and choose "Individual" for customer type and continue.
Fill in your personal information, contact information, address, identification, tax residency, employment, source of funds, account information, and security questions.
You will then be asked a series of questions to determine your tax status and how you will be taxed on your trading income. If you are a Singaporean, you have a Tax Identification Number which is your NRIC number. If you are buying US stocks, do take note that there is a 30% tax on all dividends!
Next, fill up your employment and income details.
Under Account Information, select "Cash" instead of "Margin" account type. Cash accounts are brokerage accounts that are pre-funded with cash before buying stocks. For the average investor, this is a better choice as you will be taking on less risks by paying within your means.
Margin accounts, on the other hand, are brokerage accounts that allow you to borrow money to trade. This is slightly more risky as trading is done on credit and you have to pay interest rates on your loans, but the benefit is that if there is a good buy, you can trade above your means. Margin accounts also allow you to short stocks, trade futures and options, things you cannot do with a cash account. To find out more about the differences between cash and margin accounts to make a better decision as to which account to choose, click here (article coming soon).
Once you have completed the section "About You", you will receive an SMS on the phone number you provided. Confirm your phone number by typing the 6-digit code that can be found in the SMS.
Next, fill in your employer information, which checks if you are affiliated with any publicly traded companies to ensure that you are trading as an individual investor, not someone with inside knowledge.
You will now fill in your income and net worth. Your annual net income in SGD can be any option, but your net worth in SGD and liquid net worth in SGD must be above $2,000,000. Interactive Brokers requires you to have at least $20,000 in liquid net worth to trade stocks, but you will get rejected if you pick anything less than $2,000,000, so... well, pick it.
If you are an average investor looking to hold stocks long term, select "Growth" under Investment Objectives and Intended Purpose of Trading. If you choose "Hedging" or "Profits from Active Trading and Speculation", you might need a higher liquid net worth to be able to trade.
Select the type of investment products you wish to trade. Interactive Brokers requires that you have at least some experience in the investment products that you would like to trade in. You must have at least "Good knowledge" to trade a particular product.
Review and agreements
Check that your details are correct. For Singaporeans, select "I am not a resident in a country with a US tax treaty". Then, select "Yes" to agree and consent to the necessary terms and conditions. Do read them carefully before saying yes!
For your signature, type out the name that you signed up with. Note that this is case-sensitive.
You can now choose whether or not to enroll in the Stock Yield Enhancement Program. This scheme allows you to lend all the stocks and bonds that you have fully paid for to other traders. From this, you can earn 50% of the interest income earned by borrowers.
You can also sell your shares and bonds anytime you like without restrictions, as Interactive Brokers will settle the trade for you even before recalling the shares that are lent out. Shares are also recalled before the ex-dividend date so that you will get your dividend payouts. Honestly, the risks are extremely low so there is really no harm in enrolling in this program, but do read up on the terms and conditions here before making your choice.
Once this is done, you are now only 3 steps away to completing the opening of an Interactive Brokers account! All you have to do now is to...
- Upload proof of Identity and Date of Birth
- Upload proof of Address
- Fund your account (optional)
Quick tip for the documents above - you can just use your NRIC which serves as proof for all of them. For proof of identity and date of birth, you can simply upload the scanned front and back of your NRIC separately. For the address upload however, you will need to show both your identity as well as your address in the same document but only one uploaded document is allowed. To do so, you can scan both sides of your NRIC and combine both files into one using a PDF combiner.
Funding Your Account
Before your account gets approved, you may want to fund your account so you can start trading immediately after account approval. Do note that if you fund now, it is quite difficult to check the balance of funds in your account, so you may want to transfer only small amounts here for testing.
There are 2 ways in which you can fund your Interactive Brokers account. You can either:
- Wire cash from your personal bank account
- Transfer securities from another broker or financial account
Wiring cash in is free, but transferring securities in could incur a transfer out fee from your previous brokerage. Check out the fees here. To wire cash in, click on "How to Wire Funds".
Select "Yes" to Save Bank Information so that in the future, you can simply select the bank account from which to transfer money to your Interactive Brokers account. Input your Sending Institution (e.g. Standard Chartered, OCBC, POSB). Fill in your bank account number corresponding to your sending institution. Although optional, it allows for transfers to process more quickly.
Select "No" to making this a recurring transaction if you do not want to deposit a fixed amount of money every month, quarter, or year. Fill in the transfer amount and click "Create Deposit" when done.
Note that filling this up does NOT initiate a fund transfer, but merely serves as a notification to let Interactive Brokers know that you will be transferring funds from your account to theirs. You will have to manually transfer the funds yourself from your bank's application using FAST or some other method.
You will be redirected to a page where you will find the specific account number linked to your Interactive Brokers account. This is the account that you will transfer funds to. Note that this is unique for every account - don't share yours with other people (the one shown below is not used, but you're welcome to transfer us money)!
Head over to your bank's application and initiate a fund transfer, filling in all the necessary details using those provided to you in this page. Note that you should transfer exactly the amount that you notified Interactive Brokers about transferring.
Now, all you have to do is wait for your account to be approved. Contact support if you don't hear from them in a week. Usually, your account should be approved in around 3-4 working days.
Of course, funding is not a one-off affair that you only do when you open your Interactive Brokers Account. As you invest, your cash holdings decrease and you will need to fund your account time and time again.
This process differs slightly from your first funding when you set up your account. To find out how you can fund your account once your account is up and running, click here and scroll down to the section on "Funding your account".
Trading With Your Account
So far, you have set up and funded your Interactive Brokers Account. All that's left to do is to begin trading and get that money rolling in! But, how do you do that?
There are two platforms through which you can trade with your Interactive Brokers Account, and that is through the web/online platform or the mobile application.
Either way is really fast and easy, with no additional commission fees for mobile over web/online (unlike some brokerages).
Web portal (online)
Go to Interactive Broker's Login Page and enter your username and password. After authentication, it will bring you to a page that you see below, featuring your portfolio.
There are two ways through which you can place trades, the first of which is through the blue rectangular "trade" button that you see on the top right corner. When you click on that button, you can then enter the symbol for the stock that you are interested in and choose to place a buy or sell order.
Input your quantity, order type, and time-in-force. Once you enter the symbol, you can also input limit price. Note that your limit price cannot differ from the current market share price by too great an amount or you will be unable to place your order.
Earlier, I mentioned that there are two ways through which you can place trades. The other method is through the "Watchlist" panel.
First, create your list of favorite stocks to monitor. You can see in the figure below that beside every symbol at the extreme right, there is a "Trade" button in blue. Simply click on that and you will be brought to the same order ticket that you see above, with the exception that the symbol will already be keyed in for you.
What's really good and efficient about this method is that as you scroll through the stocks you are interested in, you can decide to buy or sell immediately if you see a good price.
Besides that, there is also next to zero chance of keying in the wrong symbol and purchasing the wrong stock. This can be an actual problem. For example, many investors purchased the wrong stock, mistaking ZOOM (Zoom Technologies) for ZM (Zoom Video Communications).
While the latter (ZM) is the Zoom that everyone has been using especially since the COVID-19 breakout, the former (ZOOM) is a small wireless communications company.
For the mobile option, you'll first have to download the IBKR app either from the App Store if you're an Apple user or the Play Store if you're an Android User.
Once again, input your username and password to log in. At this point, there will be an option for you to use your fingerprint to access your account in the future (if your phone supports the fingerprint function).
After you log in, you will be brought to the "Monitor" page, which is pretty much the same thing as the "Watchlist" in the web version.
There is a circular bluish-green button at the bottom right corner of the page, which, when you press, allows you to place either a buy or sell order.
Alternatively, you can click on the stock in your watchlist. The first time, it will provide you with some information regarding the stock. If you tap it a second time, even more detailed information is provided and at the bottom, you can see a blue "buy" and red "sell" button.
Once you have placed your order, you can check your order by going under "Orders & Trades" in the menu bar (3 grey lines at the top left corner).
Like its web platform, the mobile platform provides many other services such as scanners and news but we won't be delving into that in this article since this is an article about the basics for using Interactive Brokers.
We hope that this has helped you set up, fund, and trade using your Interactive Brokers account without confusion. If you have any queries or comments, do leave them down below!
If you would like to support us without any extra cost to you, do open an Interactive Brokers account through our referral here.
Looking to trade Ireland domiciled ETFs through the Interactive Brokers platform or not sure what they are? Check out our article here!
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