This article idea/need came up after realizing my Boom Brokerage account in Hong Kong wasn’t covering the Europe area so I couldn’t invest in any UK ETFs after the bargain opportunity created by the Brexit.
I’m sad and a bit upset, but there is always a solution to any problem.
I started to research for an alternative brokerage firm with a wider range of countries. To my surprise, I learned that not only my brokerage was limited to Asia and US stocks, but the fees charged are astonishing.
Every time I buy an ETF, I get charged US$20 plus a 3% fees on future dividends.
After reviewing the best online stock brokerage out there, I was happy to learn that not only I can access to new exchange stock markets but drastically reduce my costs. The less my cost are, the better for my ROI.
Why pay more for something when some else is offering for less?
Your choice of broker is not a decision to take lightly. Paying US$20 a trade compared to US$2 makes a significant difference to your net worth over time.
If you trade 10 times per month, how much would you spend extra over a period of 30 years?
The difference between a US$20 and US$2 is US$18. Multiply for 10 trades per month, then per 12 months, then for 30 years.
Shocking? It is.
So, paying US$18 extra for the same service today might look irrelevant, but over time is going to blow in your face.
WHAT MAKES A GREAT ONLINE BROKER?
I’ve considered a number of elements to consider only the top 3 best International brokers on my list.
When you take all resources, features, trading platforms, fees, and technology into account, Saxo Bank is the best for the largest number of people.
For those advanced trader, high volume traders or professional, I would recommend going with Interactive Brokers.
Here a list of factor I took in consideration to list the best online brokerage:
- Markets Coverage: The more the better, you never know in the future where you’ll be investing.
- Costs and Fees; The lower the better, that means more money left for you to invest.
- Platform; You want a user’s friendly online software to place your orders. Some investors had an issue with some brokerage platform resulting in “buying” instead of “selling” security.
- Stability; You want your cash to be safe, isn’t it? Ensure the brokerage is well capitalized and don’t take risky bets.
As I’m an international investor, I value to classify the major stock brokers available internationally with easy access online and excellent customer support.
The guide is intended to be as comprehensive as possible.
BEST ONLINE INTERNATIONAL BROKERAGE FIRMS
This well-established firm is based in US with international offices in Europe, Asia and Australia. It is the largest U.S. electronic brokerage firm by a number of daily average revenue trades; it also is the leading Forex broker.
It is famous among traders because of the lowest fees per trade on the market and unbeatable low currency exchange rates. To open an account, you need a minimum of US$ 10.000.
Interactive Brokers offers extensive data feeds at pass-through prices. These are also now available for non-clients through its Interactive Brokers Information Systems (IBIS) platform, which may be a partial solution to the problem of getting good international price and fundamental data for global stocks at reasonable fees.
The major downside is the software used for trading, outdated and bulky. For me, it isn’t a problem because I’m comfortable with any type of software, but for users who need clear and simple steps to place a trade, Interactive Brokers isn’t suitable.
Stocks; US, Mexico, Canada, Austria, Belgium, France, Germany, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, UK, Australia, Hong Kong, India, Japan, Singapore.
Options; US, Canada, Belgium, France, Germany, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, UK, Australia, Hong Kong, India, Japan, Singapore, South Korea.
Futures; Same as per options.
ETFs; US, Canada, Belgium, France, Germany, Netherlands, Spain, Sweden, Switzerland, UK, Australia, Hong Kong, India.
Warrants; US, Canada, Germany, Australia, Hong Kong.
Metals; IDEALPRO Metals.
Indices; US, Canada, Austria, Belgium, France, Germany, Italy, Netherlands, Spain, Sweden, Switzerland, UK, Australia, Hong Kong, India, Japan, Singapore, South Korea.
Bonds; US, Europe, Hong Kong.
Funds; US, Netherlands.
There are two types of commissions; fixed and tiered.
The first is fixed, where you pay 0.5 cents per share bought in the US, with a minimum amount of US$1/trade.
This means that if you purchase anywhere from 1 share to 200 shares, you will pay US$1. If you buy 1000 shares, you will pay US$5. For other countries, the price is 0.8 cents per share with some charging slightly more.
The second commission type is tiered. Tiered pricing for stocks, ETFs and warrants include low broker fee, which decreases depending on volume, plus exchange, regulatory, and clearing fees.
The minimum fee is $0.35 per trade. This means if you invest in 1000 shares, you will pay a US$3.5 commission. This is only for the US, for other countries fee click here.
So, for the International investors, the better option is the tired commission as some countries charge a high minimum fee for tired plans.
For example, if you buy UK shares, you’ll be charged 6 Pound Sterling for the first 200 shares if using a fixed plan. Instead, with a tired plan you have a minimum commission of only 1 Pound Sterling.
There is a US$10 fee per month for account holding less than US$ 100.000. However the monthly fee is reduced by a number of commissions you generate each month, so if the first month you spend US$3, then you will pay US$7 in account fees.
However the monthly fee is reduced by a number of commissions you generate each month, so if the first month you spend US$3, then you will pay US$7 in account fees.
Whenever you receive dividends from your holdings, Interactive Brokers don’t charge anything.
AUD, CAD, CHF, EUR, GBP, HKD, INR, JPY, MXN, NOK, NZD, SEK, SGD, USD.
Currency conversion charges are the lowest on the market at 0.002% margin of inter-bank rate.
Interactive Broker is great to reach a wide range of markets and park money in different currency. It’s most suitable for investors buying blue chips or ETFs considering the small amount of shares traded.
However, if you buy large volumes, for example penny stocks, you better switch to a brokerage that charges a fixed amount per trade.
Another international roller this is a broker and investment bank based in Denmark founded in 1992.
Pretty similar to Interactive Broker with a wide selection of markets and currencies.
The only difference is the fee and a much better trading platform as explained below.
SaxoTraderGO is an excellent software which is user-friendly, simple and intuitive.
The charts are modern and easy to use, big buttons with different colors that will ensure you don’t get confuse when placing an order. For technical analysis, graphs and interface are wonderful.
Searching for stocks is a breeze, and you get some good news feed while trading.
Finance Magnet has done an excellent SaxoTraderGO’s review.
Stocks; US, Mexico, Canada, Czech Republic, Greece, Ireland, Belgium, France, Germany, Italy, Poland, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, UK, Hong Kong, Japan, South Africa.
ETFs; As above.
Metals; No Metal.
Commission are tired with a minimum amount starting at US$12 and added commission starting at 20 cents per share.
Considering the high minimum fee, it’s worth it if you trade high volumes.
There aren’t commissions for accounting maintenance, only some country get charged if the account isn’t active.
There is a minimum of US$5 per month for custody charges for bonds and stocks.
AUD, CAD, CZK, DKK, CHF, EUR, GBP, HKD, JPY, MXN, NOK, SEK, PLN, USD.
Currency conversion charges are 0.5% margin of inter-bank rate.
Saxo isn’t as cheap as Interactive Broker for small volume, but offer alternative markets reach and the trading platform is friendly.
Saxo has been accused of manipulating its system after Switzerland De-Peg from the Euro in 2015. Here is the view of John Hempton. He isn’t the only blogger and investor complaining about it.
The full-service broker was founded in 1973, and as early 2016, Schwab was home to a staggering $2.51 trillion in total client assets.
From advisory services to research, active trading, customer service, ease of use, and more, Schwab understands what it means to provide a high-quality offering.
They have got an international trading account that reaches 30 foreign exchanges. They are a bit more expensive than Saxo Bank and Interactive Broker starting at US$ 8.95 per equity trade.
However, investors trading ETFs will also enjoy Charles Schwab as the leading broker in its offering of commission-free ETFs, with 214 in total. Chuck Jaffe said there’s a difference between an inexpensive sandwich and a free lunch.
One more thing, all these free ETFs are domiciled in the US, and International investors should keep in mind the 30% TAX on dividends and US estate tax treaty.
Customer service is the best part of Schwab; professional, 24/7 and friendly.
NOTE; The International account is only available for investor resident in the US.
Good analyzing tools and traders will love the easy order entry.
Stocks; US and Pink Sheets, Canada, Australia, Belgium, France, Finland, Germany, Italy, UK, Netherlands, Hong Kong, Japan.
ETFs; As above.
Metals; No Metal.
Schwab charges a flat fee of US$ 8.95 for stock trade and $8.95 + $0.75 per option’s contract.
Domestic and International Wire fee is US$25. No account fees.
AUD, CAD, EUR, GBP, HKD, JPY, NOK, USD.
Currency conversion up to 1%.
Charles Schwab is the broker for the US residents that want to go International. They are a bit more expensive than the competition but they make up with an excellent customer service support.
What brokerage are you using at the moment? Are you happy? Share the good and bad thing about your online brokerage.