Things to keep in mind when investing in US stocks

Inexperienced investors tend to prefer local markets where they can trade equities from a geographical region they are familiar with.

However, limiting yourself to a single market not only results in potential missed opportunities, but may also prevent you from adequately diversifying your financial portfolio. This is particularly pertinent as the world, still in the throes of a pandemic, grapples with geopolitical unrest and market volatility with rising inflation and threat of a recession, making it risky to confine your investments to a single geographical region.

US stocks offer opportunities for portfolio diversification and have the potential for profitability, given how strongly US markets have rebounded since the early days of the pandemic.

In today’s unpredictable markets, putting all your eggs into one basket can be highly risky.

“A series of global crises has shown us that investors should strive to diversify their financial portfolios—not only through investment types, but also in a variety of markets. A well-diversified portfolio is resilient enough to ride out market volatility so that it does not suffer from an overall loss,” says Mr Gavin Chia, managing director of Futu Singapore.

“One way to diversify one’s portfolio is through geographical diversification, as individual markets react in varied manners to global events. Diversifying ensures that the performance of your entire portfolio does not hinge on singular events.”

Singaporean investors who have outsized exposure to assets from a single market, such as SGX stocks, can diversify their portfolios by turning to overseas markets like the US.

Despite the current economic turbulence and geopolitical turmoil, the US market continues to enjoy a promising long-term outlook, says Mr Chia.

“The US market should be a key consideration for Singaporeans looking to branch out because of its continued resiliency in the face of a volatile global climate. US stocks have always been a hot topic for Singapore investors and continue to be the most traded on digital platforms.”

Nobody knows how the market will perform in the coming weeks and months. However, its long-term outlook is much more certain. In the past 20 years alone, the market has experienced everything from the dot-com bubble burst to the Great Recession to the crash in the early stages of the Covid-19 pandemic – along with countless smaller downturns along the way. Despite the turmoil, it still earned positive average returns.

Trading in US markets also gives Singapore investors the opportunity to own stocks in world-renowned brands such as Apple and Tesla. Such blue-chip stocks can offer a measure of stability in turbulent markets.

Commissions and fees are one of the key factors traders must consider when choosing a trading platform. As they eat into trading profits, these fees can directly affect one’s success as a trader.

Futu Singapore (“Futu SG”) (“moomoo”) makes investing more accessible by lowering the cost of trading, enabling traders to maximise their profits.

To this end, the company offers lifetime $0 commission* for US stocks on its moomoo platform. This will bring an enhanced investing experience for local investors who are looking to access the S&P 500 and some high-growth stocks at attractive entry points for longer-term opportunities.

This is in line with the company’s ethos of accessible trading.

“At Futu Singapore, we believe in empowering individuals to take charge of their financial future, to be unencumbered by their current means,” says Mr Chia.

“As a people-centric business, we want to ensure that individuals are able to trade profitably, and we are doing this by providing them with a platform that has $0 commissions* on US stocks. This lowers the barrier of entry for investors and offers them greater accessibility to the trading field.”

Futu SG (moomoo) also offers $0 platform fees* and $0 market data fees*, making them a highly value-for-money option.

Apart from the cost of trading, savvy investors should also consider connectivity to ensure their investment platform can connect them to the financial markets seamlessly and safely. 

Futu SG’s (moomoo) free real-time market data and Level 2 quotes make the platform a one-stop hub for real-time quotes, financial stats and market news for the US market at no additional cost.

Traders can also trade US stocks over extended hours from 4pm to 8am (Singapore time).

“The moomoo platform supports the trading of US stocks for up to 16 hours of trading time on trading days – 6.5 hours of regular trading hours and 9.5 hours of pre-market and after-market trading hours. This ensures that investors can increase the flexibility of when they want to trade and how they want to optimise their trading strategies,” says Mr Chia.

In addition to an intuitive interface that enables even beginner traders to learn the ropes easily, Futu SG (moomoo) offers a wide range of educational materials, research on individual shares and a vibrant in-app community which enables traders of all levels to learn from each other .

Unlike traditional brokerages, which typically require traders to educate themselves elsewhere, moomoo functions as a one-stop investment platform that makes it easy for beginners to become better traders.

“We champion financial literacy for users of all calibres,” Mr Chia says of Futu SG’s people-centric approach.

Futu SG is licensed by the Monetary Authority of Singapore, and is backed by world-class investors like Tencent, Sequoia Capital and Matrix Partners.

Their account opening process takes only a few minutes and gives traders access to US, Singapore and Hong Kong stock markets, funds and more.

To start enjoying $0-commission trades for US stocks, register for a Futu SG Securities account here.

Disclaimer: No content herein shall be considered an offer, solicitation or recommendation for the purchase or sale of securities, futures, funds or other investment products. It does not take into account your investment objectives, financial situation or particular needs.

All information and data, if any, are for reference only and past performance should not be viewed as an indicator of future results. It is not a guarantee for future results. Investments in stocks, options, ETFs, funds and other instruments are subject to risks, including possible loss of the amount invested.

The value of investments may fluctuate and as a result, clients may lose the value of their investment. Please consult your financial adviser as to the suitability of any investment.
 
This advertisement has not been reviewed by the Monetary Authority of Singapore.