Author Topic: Commission free trading for non-US citizens?  (Read 5458 times)

Sjalabais

  • Bristles
  • ***
  • Posts: 257
  • King of Chocolatistan
Commission free trading for non-US citizens?
« on: December 11, 2015, 01:03:39 PM »
I'm in Norway and all flat index-investments, stock trading, FX trading I have found so far (only looking with one eye, so I don't claim full wisdom here) is dragged down by pretty harsh commissions. My bank, for example, charges min. 30$ for every US-stock purchased (min. 95 NOK for every Norwegian stock purchased). Robinhood is an app that gets mentioned on this forum a lot, and like so much else that smells fresh, it's only available to US citizens. P2P lending will be persecuted in Norway, so that's no option either.

Anyone here in a similar position? How do you trade and earn money without throwing money to the wolves?

zz_marcello

  • 5 O'Clock Shadow
  • *
  • Posts: 53
Re: Commission free trading for non-US citizens?
« Reply #1 on: December 11, 2015, 01:19:47 PM »
Even if you could do it, things like Robinhood are in my opinion not serious at this stage of their business, because they have nearly no equity.
One sharp market move like the Swiss Franc explosion beginning of 2015 would tank the company and with that your equity till you are compensated after some month/year.

I would take a worldwide broker like Interactive Brokers
https://www.interactivebrokers.com/en/index.php?f=1323
You can trade literally everything there and US based Stocks, Bonds, Futures and Options are dirt cheap.
200 US Stocks are $1, $100k Forex is $1....
They have nearly $5B equity capital; Margin yield is ultra low.
https://www.interactivebrokers.com/en/index.php?f=1338&ns=T
I would call them the "Vanguard" for trading because the have a similar approach. The owner built the business from scratch for decades. He is still CEO and has the mission to be the worldwide address for trading. Its a disrupting business.
You can also use them for investing (when you have more than $100k there is no monthly fee, otherwise its $10 per month if you don't make any trades).

Im originally from Germany, living in the US since 3 years.
I'm with Interactive Brokers since nearly 10 years; they are absolutely professional.
You can use their service in nearly every country in the world. So for me as an Expat, Trader and Investor its perfect.
« Last Edit: December 11, 2015, 01:38:05 PM by zz_marcello »

Sjalabais

  • Bristles
  • ***
  • Posts: 257
  • King of Chocolatistan
Re: Commission free trading for non-US citizens?
« Reply #2 on: December 12, 2015, 05:25:47 PM »
Thank you for what looks like an excellent tip! I'll look into it.

mrpercentage

  • Handlebar Stache
  • *****
  • Posts: 1236
  • Location: PHX, AZ
Re: Commission free trading for non-US citizens?
« Reply #3 on: December 12, 2015, 07:17:46 PM »
I'm in Norway and all flat index-investments, stock trading, FX trading I have found so far (only looking with one eye, so I don't claim full wisdom here) is dragged down by pretty harsh commissions. My bank, for example, charges min. 30$ for every US-stock purchased (min. 95 NOK for every Norwegian stock purchased). Robinhood is an app that gets mentioned on this forum a lot, and like so much else that smells fresh, it's only available to US citizens. P2P lending will be persecuted in Norway, so that's no option either.

Anyone here in a similar position? How do you trade and earn money without throwing money to the wolves?

Depends on how fast you plan on trading and how much control you want. If you have certain company you want to build a position in you can try direct stock purchasing. Many companies have zero fees and all do fractional shares some allow international, some do not.. a few zero fee companies include:
ABBOTT LABORATORIES   
ABBVIE INC.   
AMERICAN STATES WATER COMPANY
AQUA AMERICA, INC.      
COLUMBIA PIPELINE GROUP, INC.
CONOCOPHILLIPS
DR PEPPER SNAPPLE GROUP INC   
EATON CORPORATION PLC
EXXON MOBIL CORPORATION
MACERICH COMPANY      
MARATHON OIL CORPORATION   
MARATHON PETROLEUM CORPORATION
MCGRAW HILL FINANCIAL, INC.   
OWENS & MINOR, INC.
PHILLIPS 66   
PHYSICIANS REALTY TRUST
PROCTOR & GAMBLE (charge $0.02 per share)
UNION PACIFIC CORPORATION   
VEREIT, INC.
WELLTOWER INC.
XEROX

Be advised they move slow. They are centered around long term Investing
forgot to add all are at www.computershare.com
« Last Edit: December 12, 2015, 07:27:54 PM by mrpercentage »

Sjalabais

  • Bristles
  • ***
  • Posts: 257
  • King of Chocolatistan
Re: Commission free trading for non-US citizens?
« Reply #4 on: December 13, 2015, 09:07:33 AM »
Wow, I didn't even think about direct share acquisition - surprised that's a real thing. Thanks!

Sjalabais

  • Bristles
  • ***
  • Posts: 257
  • King of Chocolatistan
Re: Commission free trading for non-US citizens?
« Reply #5 on: January 19, 2016, 08:20:27 AM »
I'm really slow in reading myself up, sorry, but now I've found that Interactive Brokers has quite expensive minimum requirements - 10$/month as a minimum expense:
https://www.interactivebrokers.com/en/index.php?f=4969
Isn't that substantial for just holding stocks?

I haven't quite figured out the computershare.com-website yet.

Maybe I'll just use my local bank anyway, sigh.

zz_marcello

  • 5 O'Clock Shadow
  • *
  • Posts: 53
Re: Commission free trading for non-US citizens?
« Reply #6 on: January 19, 2016, 08:46:48 AM »
Hi,

you have to make your own numbers.

- Do you have more then $100k in this trading account? If yes, then you monthly Interactivebrokers (IB) fee/minimum is $0.
- If not, how many transactions do you have per year and what fee delta would it produce compared to you local offer? (IB trading costs are nearly 0)
- Do you have an advantage to be able to trade worldwide (for example Singapore or Hong Kong with currently low valuations tradeable with IB) or not?

Have a nice week!

I'm really slow in reading myself up, sorry, but now I've found that Interactive Brokers has quite expensive minimum requirements - 10$/month as a minimum expense:
https://www.interactivebrokers.com/en/index.php?f=4969
Isn't that substantial for just holding stocks?

I haven't quite figured out the computershare.com-website yet.

Maybe I'll just use my local bank anyway, sigh.
« Last Edit: January 19, 2016, 08:48:24 AM by zz_marcello »

Mr FrugalNL

  • Stubble
  • **
  • Posts: 131
  • Location: Netherlands
Re: Commission free trading for non-US citizens?
« Reply #7 on: January 19, 2016, 03:21:33 PM »
I don't live in Norway, but my new broker is active there too. They're called Degiro.

I haven't been a customer for very long, but I can tell you their fees for Dutch investors are very low. In fact, the first transaction in certain ETFs is commission free each month. There are a few things to be wary of, though:

- If you open any type of account other than a 'custody account', Degiro is free to lend your securities to all types of stock exchange cowboys. These may then go bankrupt, leaving you without your securities. Degiro of course claims that the risks are minimal, but the risk is fully borne by clients and the returns go to Degiro. In return, you pay even lower fees. Bad idea, if you ask me.
- When you transfer money into your account, it is automatically put into a money market fund. The money isn't guaranteed by the Dutch government up to 100,000, unlike bank accounts.
- Clients' orders may be matched up with other clients' orders rather than being sent to the stock exchange of your choice. (You can opt in if you wish to use this.) The good news is that this is supposedly cheaper, the bad news that your order may or may not be executed at the best price possible. In any case, it is intransparent. Degiro also has a hedgefund that sends orders into this dark pool. There could be a conflict of interests there.

Whatever you do before you become a client, read the fine print very carefully. The above may or may not apply to Norwegian investors. Words of warning aside, it's hard to beat Degiro's fees.

Sjalabais

  • Bristles
  • ***
  • Posts: 257
  • King of Chocolatistan
Re: Commission free trading for non-US citizens?
« Reply #8 on: January 20, 2016, 04:47:38 AM »
Thanks a lot for the tip, and another solid reminder of why there is no free lunch. Why did you end up greenlighting these risks for your investment?

For the time being, the one stock I'm interested in, that is dirt cheap right now, is Alibaba. But I haven't figured out how to buy it yet.

Mr FrugalNL

  • Stubble
  • **
  • Posts: 131
  • Location: Netherlands
Re: Commission free trading for non-US citizens?
« Reply #9 on: January 20, 2016, 05:59:54 AM »
Thanks a lot for the tip, and another solid reminder of why there is no free lunch. Why did you end up greenlighting these risks for your investment?

Glad to help. With regard to the risks:
- My account with Degiro is of the custody type, so my securities aren't lent to third parties. No risk there. I pay slightly higher fees for this safety, which is well worth it to me.
- Money market funds are relatively safe investments, so the money I put in there is almost as safe as it would have been in a bank account. Also, the money doesn't spend much time in the money market fund because I transfer it to my bank account or use it to buy ETF shares as quickly as possible.
- I haven't opted into the in-house matching system, so my orders get sent to the stock exchange rather than into the dark pool.

For the time being, the one stock I'm interested in, that is dirt cheap right now, is Alibaba. But I haven't figured out how to buy it yet.

I don't think that's such a great idea. All publically available information about companies is disseminated at the speed of light, and investors act on it within seconds. If there is a breaking news article that says Alibaba is undervalued and investors collectively believe it, then demand for the stock will rise and supply will fall very quickly to the point where the stock is once again valued fairly in light of the new information. This effect is described by the efficient market hypothesis. It's a big part of the reason a lot of investors on this forum prefer index investing, including me. I'd suggest you at least read up a bit more on index investing before you decide you want to invest in individual stocks. The Bogleheads wiki and the stock series would be good places to start.

mrpercentage

  • Handlebar Stache
  • *****
  • Posts: 1236
  • Location: PHX, AZ
Re: Commission free trading for non-US citizens?
« Reply #10 on: January 20, 2016, 06:37:18 AM »
Thanks a lot for the tip, and another solid reminder of why there is no free lunch. Why did you end up greenlighting these risks for your investment?

For the time being, the one stock I'm interested in, that is dirt cheap right now, is Alibaba. But I haven't figured out how to buy it yet.

Yahoo. Unfortunately they are not free like Exxon or Johnson & Johnson but here is where you can find it

https://www-us.computershare.com/investor/3x/plans/planslist.asp?planid=159&state=eStateDisplayPlanSummary