Earn Extra Income in Singapore Without Legally Paying Taxes in 2024
Singapore is uniquely advantageous for retail investors like you and me, especially those looking to grow their wealth through the stock market. One of the best things about living in Singapore is that residents don’t have to pay capital gains tax on money they make from investing in stocks. Yes, you heard it correctly. Any profit you gain from trading stocks, whether on local (SGX) or international exchanges (NYSE, Nasdaq, LSE, etc), remains entirely yours.
Here is a screenshot from IRAS. Click on the image to read more from IRAS web.
Disclaimer
The information provided in this article is for educational and informational purposes only and should not be construed as financial advice. Investment in the stock market involves substantial risk, including the possible loss of principal. We do not guarantee any specific outcome or profit; you should know the risks involved. Before making any investment decision, it is recommended that you seek advice from a qualified financial advisor.
Why do you want to invest?
The simple answer is that money loses value over time due to inflation. This means that the $1000 you have in your pocket now will have lower purchasing power in the future. Because of this, you need to beat inflation. You can put your money to work and do it. Also, with the power of compounding, investing allows you to grow your wealth over time.
Investing vs Gambling
Investing is not a quick path to wealth. Some people enter the stock market to become millionaires overnight. I even did it in the early days after I started trading. With this overnight millionaire mindset, I have lost thousands. It’s not investing; it’s something like Gambling. So, I would first say not to try to become rich quickly. Investing is a smart and safe way to get rich, but you need to be careful when you do it.
Where to invest?
There are many ways to invest our money to get a higher return. Here are some;
- Investing in the stock market
- Investing in properties
- Investing in commodities such as gold
- Investing in cryptocurrencies
- Investing in bonds
- Investing in rare collectables and arts
- Many more
However, investing in the stock market is the easiest, relatively safest, and most convenient way to invest in Singapore without massive capital.
A gift from me
I’ve had the privilege of conducting webinars on ‘Stock Market Basics’ for the Sri Lankan community in Singapore. The feedback from these sessions has been overwhelmingly positive.
I have prepared a slide deck for this webinar. If you need to understand the basics, you can download the slide deck in PDF format from the link below.
Let’s jump into the topic.
To start investing in the stock market, you need a brokerage account. A brokerage is a firm that acts as a middleman between buyers and sellers to facilitate stock transactions.
Famous Brokerages in Singapore
- Interactive Brokers (IBKR)
- Moomoo (powered by FUTU)
- Webull
- DBS Vickers
- OCBC Securities
Selecting a Brokerage
When choosing a brokerage in Singapore, consider these key factors to ensure you select the best fit for your investment style and needs:
- Ensure the brokerage is registered with the Monetary Authority of Singapore (MAS) for compliance and security
- Check if they offer Securities Investor Protection Corporation (SIPC) insurance, which can protect against the loss of cash and securities held by a brokerage.
- Check their tools (web, mobile) and technologies and their user-friendliness.
- Compare commission fees for trades.
- If considering trading on margin, review the interest rates, as these can impact the cost of trading.
- Assess the quality of customer service provided.
- Look for other important features, such as access to international markets, educational resources, or advanced trading features.
Interactive Brokers (IBKR)
I have been investing (sometimes trading) in the US market since late 2019. In this article, I will share how to start investing or trading in the stock market from Singapore using Interactive Brokers (IBKR) and some of my experience in the stock market.
Pre Conditions
It’s super easy to create an account in IBKR if you have an active SingPass account. If you don’t have one, I strongly suggest you get it done first.
Referral Link
Here is a referral link to open an account with IBKR. Consider using it.
Click here to start: https://www.interactivebrokers.com/referral/navodya950
What will you get? Here is a screenshot from IBKR.
Step 01
Click on the referral link. This referral is from my Wife’s IBKR account.
https://www.interactivebrokers.com/referral/navodya950
Once you click, you will see a screen like the one below where you can open an IBKR account. Click on the “Open Account” button to continue.
Step 02
Fill in your email address, enter a username and a strong password, and select the country as Singapore. Then click on the “Create Account” button.
Step 03
Verify your email. Go to your email and click the confirm email button to verify the email.
Step 04
Select the account type as “Individual” and click the “Start Application” button.
Here is a screenshot from IBKR that explains the different types of accounts. For more information, please refer here.
Step 05
Retrieve your information from SingPass my info. This way, you do not want to provide supporting documents to prove your income, employment, residency, etc.
Step 06
Since I already have an account with IBKR, I cannot take all screenshots. However, I found this very informative video. After you have done the above 5 steps, please refer to the video below and follow the instructions.
Things to note,
Residency
- If you are an expat in Singapore, you are a tax resident of Singapore. Please use your FIN as your tax identification number.
Base Currency
- I selected USD as my base currency as I only invest in the US market. If you select SGD, all the numbers will be shown in your IBKR account in SGD.
Account Type
- If you are an absolute beginner, create a cash account. Later, you can change it to a margin account if needed.
For other instructions, you can follow the video. Be sure to follow the video below after you have completed the 1-5 steps.
Step 07
Once you have filled in all the information, review it carefully and submit it.
After you submit it, you can fund your IBKR account. In the video above, the creator uses Wise to fund his IBKR account as he is from Malaysia, and IBKR did not directly support MYR. However, you do not need to deposit money via Wise if you live in Singapore. You can use your primary savings account (DBS, OCBC, SCB, etc) to fund directly from SGD. Once you have deposited SGD into your IBKR account, you can convert your SGD to USD by doing a quick forex trade in IBKR.
IBKR Account Approval Process
Once you’ve submitted all the required details and made your initial deposit, IBKR will review your application.
The approval process typically takes between 1-3 business days, depending on the completeness and accuracy of the information provided.
Upon approval, your account will be activated, and you’re all set to start trading.
Lessons I Learned
- There is no way to become an overnight millionaire through trading.
- Shorting can be painful.
- Do not open your trading app soon after waking up.
- Do not use your emergency fund for trading.
- Avoid relying on random YouTube videos for stock market advice.
- Avoid penny stocks
- Think long-term and avoid sensitivity to short-term price movements.
- Know When to Exit
- Try to avoid using margins unless necessary.
- Celebrate Small Wins
Always Invest Safe
That’s it for today, guys. Thank You for Reading! I hope you found this article informative and useful.
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