[Investing for Beginners] Introduction to US Stock and Securities Account Fee Comparison
[Investing for Beginners] Introduction to US Stock and Securities Account Fee Comparison
Start Investing
 • 

October 11 • 4 min read

語言: 廣東話

The political and economic instability in Hong Kong has weighed on the city’s stock market. More Hong Kong investors are switching to higher-achieving US stocks among which ETFs are one of the most popular choices.

However, before opening a US stock account, there are a few rules that amateur investors must know. Read on learn the basics of the US stock market and have a fee comparison of the most commonly used US stock securities accounts in Hong Kong!

Minimum fees to buy US Stocks

Hong Kong stocks’ minimum trading unit is a “lot”, the number of shares in each “lot” usually ranges from 100 to 2,000.

Let’s say you want to buy HSBC Holdings (0005) stocks. They have a minimum lot size of 400 shares. If each share costs HKD 58, the minimum account of money to buy a lot of HSBC Holdings (0005) would be over HKD 23,000 (400 shares x HKD 58 plus transaction fees).

In the US, however, the minimum trading unit of US stock is a “share”.

Take Apple Inc. (AAPL) as an example, their stock price was around USD 220 (~HKD 1,716) in October 2019 so you could start investing with just HKD 1,716!

Because of this, generally, the minimum amount you need to invest into US stocks is much lower than Hong Kong stocks.

Buying US stocks is pretty easy in Hong Kong as most banks provide US stock accounts but the fees are MUCH lower if you buy it through securities firms or robo-advisors.

These transaction costs can add up really quickly, are easily avoidable and offer no value to an investor – so just pick the broker or company with the lowest costs (based on your trading habits).

HK Market
US Market
uSMART Securities
Custodian Fee
HKD 0
Avg. Trade Cost
HKD 8
Welcome Offer: Apply via Planto before 30 September 2020 and be eligible for: • One share of Jiumaojiu (09922.HK) • Two shares of Peijia Medical (09996.HK) plus one month professional investment if first-time deposit deposit > HKD 20,000 • Two shares of Ping An Good Doctor (01833.HK) if first transaction with the amount over HK$500 and assets under management amount HK$100,000 or above within 30 days upon account activation
See more
See more
See more
SoFi Hong Kong
Custodian Fee
HKD 0
Avg. Trade Cost
HKD 0
See more
See more
uSMART Securities
Custodian Fee
HKD 0
Avg. Trade Cost
HKD 12
Welcome Offer: Apply via Planto before 30 September 2020 and be eligible for: • One share of Jiumaojiu (09922.HK) • Two shares of Peijia Medical (09996.HK) plus one month professional investment if first-time deposit deposit > HKD 20,000 • Two shares of Ping An Good Doctor (01833.HK) if first transaction with the amount over HK$500 and assets under management amount HK$100,000 or above within 30 days upon account activation
See more
See more
See more
9F Primasia Securities Limited
Custodian Fee
HKD 0
Avg. Trade Cost
HKD 0
Welcome Offer: New customer via Planto is entitled to enjoy the below welcome offer:
See more
See more
See more
9F Primasia Securities Limited
Custodian Fee
USD 0
Avg. Trade Cost
HKD 15.5
Welcome Offer: New customer via Planto is entitled to enjoy the below welcome offer:
See more
See more
See more
Futu Securities
Custodian Fee
HKD 0
Avg. Trade Cost
HKD 15
Welcome Offer: Apply via Planto and be eligible for HKD 100 supermarket coupon and 1 free share of Twitter after depositing HKD 10,000
* Terms and conditions apply
See more
See more
Futu Securities
Custodian Fee
HKD 0
Avg. Trade Cost
HKD 15.5
Welcome Offer: Apply via Planto and be eligible for HKD 100 supermarket coupon and 1 free share of Twitter after depositing HKD 10,000
* Terms and conditions apply
See more
See more
Valuable Capital Limited
Custodian Fee
HKD 0
Avg. Trade Cost
HKD 15.5
Welcome Offer: Between now until 30th September 2020, the following benefits will be allocated by Valuable Capital to new users who have completed online registration and account opening through Planto's link*:
See more
See more
See more
Valuable Capital Limited
Custodian Fee
HKD 0
Avg. Trade Cost
HKD 15
Welcome Offer: Between now until 30th September 2020, the following benefits will be allocated by Valuable Capital to new users who have completed online registration and account opening through Planto's link*:
See more
See more
See more
Saxo Markets
Custodian Fee
HKD 0
Avg. Trade Cost
0.08%
(min. HKD 40)
See more
See more
Saxo Markets
Custodian Fee
From 0.06% p.a.
(min. HKD 38)
Avg. Trade Cost
From HKD 0.05 / share
(min. from HKD 23)
See more
See more
Charles Schwab, Hong Kong, Ltd.
Custodian Fee
HKD 0
Avg. Trade Cost
HKD 0
See more
See more

Custodian Fee
Avg. Trade Cost
BOC Hong Kong
HKD 100 - 150
per half year
HKD 0.16 / share
(min. HKD 140)
BOC Hong Kong
Custodian Fee
HKD 100 - 150
per half year
Avg. Trade Cost
HKD 0.16 / share
(min. HKD 140)
HSBC
HKD 25 - 30
per month
> HKD 140
per trade
HSBC
Custodian Fee
HKD 25 - 30
per month
Avg. Trade Cost
> HKD 140
per trade
Citibank
Free
HKD 100 if inactive for 6 months
0.5% - 1%
(min. HKD 230)
Citibank
Custodian Fee
Free
HKD 100 if inactive for 6 months
Avg. Trade Cost
0.5% - 1%
(min. HKD 230)

Like we said, it's cheaper to start investing with a broker and you get a much better user experience.

How to start investing in 3 steps

1
Open an account
You can open an account with most brokers 100% online and it only takes about 10 minutes. In most cases, you will need your HKID and address proof and that's about it.
2
Transfer money in
Once your account is opened, you can transfer money through bank transfers or even FPS. You'll need to deposit HKD 10,000 if you want to verify your account online (but otherwise, you can visit them in person!). Your money will usually be received within the same day.
3
Start investing
Once the broker receives the money and your account is verified, you can start investing - that's literally it!

US Stock Exchange Fees and Taxes

Apart from commissions and platform fees charged by banks and securities firms, investors will also be charged by US regulatory authorities. Yet, it is still generally cheaper than buying Hong Kong stocks. The main fees are as follows:

Charged Items Fees (in USD)
SEC Fee* Adjusted seasonally, commonly varies from 0.00213% to 0.00218% of the transaction amount
Trading Fee $0.003 per share
Transaction Fee* $0.000119 per share
Dividend Tax Rate 30%

*For sale trades only

Trading Hours for the US Stock Market

The trading hours of the US stock market are different in winter and summer times. In summer, the trading hours are from 9:30pm to 4am in Hong Kong time. They are one hour late in winter – from 10:30pm to 5am in Hong Kong time.

3 Major US Stock Indices

Similar to how we have the Hang Seng Index (HIS) in Hong Kong, there are 3 major US stock indices which indicate the overall market performance in the US.

  • Dow Jones Industrial Average (DJIA) – Founded in the 19th century, it measures 30 listed companies including Coca-Cola (KO), Boeing (BA) and Goldman Sachs Group (GS).
  • NASDAQ Composite (NASDAQ) – Founded in 1971, its 100 constituent stocks are mainly from IT, Telecommunication and Biotech sectors, including Google (GOOG), Apple Inc. (AAPL) and Microsoft (MSFT)
  • S&P 500 Index (S&P 500) – Founded in 1957, its constituent stocks are more diversified, measuring 500 listed companies including Facebook (FB), Johnson & Johnson (JNJ) and ExxonMobil (XOM)

Pros of US Stock

  • They have lower entrance fees: The minimum trading unit of US stock is only a share! And the management fee is relatively cheap. You can start investing with less money.
  • They offer more and better choices: Many of the world’s top companies chose to get listed in the US. You can easily find a quality stock of interest and there are more ETFs in the US too.
  • You are exempt from profits tax: Americans are required to pay investment income tax but luckily Hong Kongers don't have to! Just fill out the W-8BEN form (most securities firms will help you with this!) and declare you’re a foreigner when you open a US stock account and you’re exempt from the tax.
  • They are highly regulated and transparent: The US regulatory authorities put a lot of effort into combating insider trading, market manipulation, financial fraud, etc. so its market transparency is high.

Cons of US Stock

  • The time difference: The opening of the US stock market is at night in Hong Kong. It could be hard for Hongkongers to stay close to the market. If you’re following a long term strategy, then it’s not too big a deal though!
  • The exchange rate: As US stocks are traded in USD, investors must pay attention to the currency conversion cost.
  • More expensive monthly stock investment plans: Investors have to pay for administrative fees of about 5% of contribution in monthly stock investment plans which makes it very hard to justify! Although, since the entry cost for US stocks is much lower, you may not need a stock investment plan at all. You could just buy a few shares of various ETFs to get a diversified portfolio!
  • High dividend tax rate: The US dividend tax is 30% which might weaken the returns on dividend investing.

(Banks and securities firms’ fees and service information are for reference only. Actual charges depend on in-time information provided by banks and securities firm.)

Invest in US ETFs with a Robo-advisor
Robo-advisors can create your US stock portfolio using AI, and you can start with as low as HKD 500!

#US Stock Investing
Share:

Track. Plan. Get advice.

Making your finances easier

22/F, 3 Lockhart Road, Wan Chai, Hong Kong
Planto Limited © 2020
Planto - HK #1 Money Tracker
Making your finances easier