We’ve written about Picking Stocks 101  & The 3 Growth Stocks We’ve Recently Added Into Our Stock Portfolio. A lot of people have been asking us – how to buy stocks as Malaysians/Singaporeans.

To buy a share in a company, you would have to do it through a stockbroker. They are professionals who help individuals like us execute buy and sell orders in the stock markets. 

There’s probably some stigma going around about how stockbrokers are blood suckers trying to get the most money out of their clients as possible. In the movie “The Wolf Of Wall Street”, Jordan Belfort (played by Leonardo di Caprio) basically shows how these stockbrokers convince clients to make trades so they get paid a commission. 

How it worked was, every time an individual made an order to buy or sell some shares, the stockbroker would charge a certain fee which acts as their commission. This then encourages them to get clients to keep making trades so they can support their Wall Street lifestyles.

Things aren’t quite the same these days though. With the emergence of technology, stock investors no longer have to liaise directly with human stockbrokers! Now, most share trading is done on a platform without the need to interact with anyone.

Imagine this, there was actually a point in time in history that we actually had to pick up the phone to call our stockbrokers whenever we wanted to buy or sell shares. Thank God we didn’t have to go through that. 

As expected, technology has disrupted the stockbroking industry. As human intervention is no longer necessary, trading fees have been driven down, lowering the barrier to entry for many investors. 

Charles Schwab, a stockbroker in the US used to charge in excess of $30 per trade on average. Insane! This means that there’s no chance you can make a trade with just $100 as fees would eat up 30% of that.

As years go by, this has reduced at startling rates where we’re now at this point

There are enough stock brokers providing commission free trading to make a list! 

Unfortunately, Malaysians don’t have access to many of these free platforms as they’re yet to open their doors to expansion. Still, we’ve done extensive research to identify some of our options, and share with you our favourites! Without further adieu, let’s go through some ways on how to buy stocks as a Malaysian.

1. Banks

To no surprise, our Malaysian banks such as CIMB & Maybank have their own stockbroking platforms. 

Available Markets

Through the banks, we can buy shares of companies in many different countries in the world. Whether you wanna buy shares of Maybank (Malaysian), Alibaba (Hong Kong), or Toyota (Japanese), our banks provide it. 

Fees

If your preference is to invest in Malaysian companies, the rates are pretty good at 0.1% with a minimum of RM8. However, buying shares of international companies can be incredibly expensive with minimums around 25USD per trade, or RM105.

Verdict

If you want to invest in our very own Malaysian companies, going the bank route is super convenient. Fees are low and the convenience of having it linked to your own savings accounts make it worthwhile.

The main con here is that there isn’t an online registration process! I know it’s not much of a hassle to drop by the nearest branch, but the convenience of being able to do everything online is something we enjoy. Also, we’ve never tried this option so we don’t know how complicated the process is.

If you want a hassle free experience with similar benefits, we recommend Rakuten. We’ve used the platform before and can vouch for the ease of account opening. However, they only provide access to the Malaysian stock market.

Investing in international companies through banks is pricey, and we don’t recommend going this route. Being charged 25USD for every trade you make can eat into your investment returns, and significantly increases the minimum amount you should be trading with.

With those kinds of fees, we would say you should steer away unless you have 2,500USD to invest per company.

So if you’re leaning more towards this route, we have 2 recommendations for you!

2. Tradestation Global

Available Markets

With TradeStation, you’ll be able to access companies from the US, Europe, & Asia! However, they do not have access to the Malaysian market which means you’d still have to rely on the banks for this.

Fees

Commissions are much cheaper for international investing. If you’re looking to buy US stocks, you’ll only be charged 1.50 USD per trade, 17x cheaper than what our local banks are charging you. Since they’re in the US, the only way to move money is through wire transfer which will set you back around 10USD.

Verdict

We really like the platform and it’s very informational. The fees are significantly lower than banks so we recommend this for those that want to invest in international companies. 

However, the platform may be a bit technical which might be confusing if you’re new to this. There are a lot of things to learn so take your time going through it!

The registration process is fully online even though this is a US broker. They’ve opened the doors for us Malaysians to sign up, providing an excellent platform that rivals the best.

Just take this into consideration, the fee you’re paying to an international broker trading US stocks – $1.50 or RM6 is comparable to what you’d pay to trade Malaysian stocks with a Malaysian broker. That’s insane. The amount of competition in the brokerage space in the US has lead to the “race to zero”.

3. Etoro

Etoro is one of the most famous social trading platform in the world. You might’ve seen their ads, the one with Alec Baldwin in it.

 

Wonder how much he got paid for that..

Available Markets

Etoro has access to a variety of markets across the world (not Malaysia though!). Unlike other platforms, Etoro doesn’t cover every single stock in the market it covers. It only allows users to invest in certain stocks, but currently include most of the more popular companies we’re looking for anyway.

Other than this, Etoro also allows for the investing of Bitcoin, commodities (oil, gold, silver), and even currencies. This is a nice mix to be exposed to for your investment portfolios.

Fees

Etoro claims that all trades are commission free. This means that they don’t charge you anything for making trades. However, we believe there are some fees being inserted into the spreads.

For example, selling Tesla will net you $729.43 while buying Tesla will cost you $731. The difference between the two quotes is roughly ~$1.6, and is called the spread. 

The real price of Tesla probably sits in between at around ~$730.2. So, Etoro likely takes a cut of around $0.80 or 0.001% in commissions. This is extremely favourable to us and has little impact on our returns.

Verdict

Currently, Etoro is the main platform we use for investing. There’s a lot to like about it. For one, the minimum deposit is only $200 or RM870 which is affordable for most of us.

Another thing we really like about Etoro is the ability to buy fractional shares. What this means is you don’t have to have $2,000 just to buy 1 share of Amazon. If you want, you can buy a fractional share for just $50, giving you 1/20 or 0.05 shares! 

This is great because it means with a limited amount of money, you’ll be able to buy a few different companies which usually isn’t possible.

As you can see, I wanted to invest $50 in the popular gaming producer Activision. At time of purchase, the price of 1 share was $63.19, meaning i only got 0.79 shares of the stock.

Also, the extremely low fees and ease of registration and deposits is a big plus point which led to us using this as our main broker.

If you want to invest with Etoro, you can use our link to sign up and we both get 50 USD when you deposit a minimum of 200 USD!

Summary

Technological advancement has disrupted many industries, and the financial one is not spared. What was once expensive, tedious, and inaccessible merely 5-10 years ago is now widely available to all.

We have a great opportunity to start investing in stocks of companies we love that will help build towards our retirement portfolios.

If you’re looking to invest in Malaysian companies, we recommend going through your banks or Rakuten.

If you want to buy stocks of international companies and is new to this, Etoro is probably the better bet as it’s more beginner friendly and easy to sign up. Advanced traders/investors might want to take a look at TradeStation for more complex instruments.

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