Investing in American stock market while living in Indonesia
I’m an Indonesian investing in individual stock with Firstrade and in Index S&P 500 using Pluang.
When you are living in the States, there are no shortage of brokerage apps that you can use — Robinhood and Webull to say the least. Investors around the world are eyeing the trillion and billion dollar companies listed in Dow Jones or NASDAQ. I am no exception.
When starting my first investment in stock market back in 2019, I played it safe, as most beginner investors would, in Indonesian Stock Exchange. Three months in, I gained my confidence in putting more money into my portfolio and I was convinced with the future of stock market. Me being conservative as I am can only invest so much in a month. I began to look for other stock markets where I can invest with equivalent monthly amount, but with better growth, and American stock market is the answer. There’s only one problem with that, Indonesian security companies aren’t allowed to trade in foreign stock market. I then proceeded to look for U.S security companies. Most of them also don’t cater the opening of international accounts.
Investing in individual stocks with Firstrade
After a few rounds of research, one of the U.S brokerage companies appeared on my Google search, Firstrade. Track record and good reputation are the main aspects that I was looking for in selecting a bokerage firm. Firstrade has been established in 1985, making it passed my first checklist, and their reputation is moderately good.
After completing the registration process, the next step before investing is to add deposit to my account balance. The only deposit option for international account is by wire transfer by banks, as they won’t accept payment that is made through 3rd party, such as Revolut or TransferWise.
This can only mean one thing, I would need to pay with my local bank that will charge remittance fee for about $25, deal with volatile exchange rate to USD, and the process needs to be done on the bank’s branch office, which is what I’m avoiding during this pandemic. I found that investing in U.S market is a lot hassle, and I postponed my intention to invest in the U.S market for a while until DBS bank launched their feature of international transfer.
DBS is a Singaporean multinational banking and already licensed to operate in Indonesia as digital banking. In addition to their high saving interest rate of 4% p.a and online account opening, their $0 remittance fee is what makes them became the new choice of bank, especially amongst millennials. When making international payment to Firstrade, I only paid the cut for the currency exchange rate, which is relatively moderate with DBS. The transfer process is done online through mobile app and the payment was received on the destination bank on the same day (less than 24 hour).
Firstrade mobile app isn’t big on User Interface (UI) and User Experience (UX), compared to modern investment app like Robinhood, as I get confused quite a few times when using the app. However, with $0 trading fee, easy registration process for international user, and the basic abilities such as selling, buying, and monitoring portfolio, Firstrade is compelling enough to use.
Investing in Index S&P 500 with Pluang
I don’t have abundance time on my hands that allows me to track my individual U.S stocks. Being a foreigner, I’m also very vigilant about the volatility of U.S market. To reducing the risk of losing large sum of money over individual stocks, I also invest in index fund. Firstrade also provides the option for me to invest in Index stock, such as S&P 500 and Vanguard. To be able to buy 1 share of S&P 500, I need to chip in at least $3,557.54. Personally, it’s a big bet and not currently in my card. That’s when I found a local investment app, Pluang, that allows the customer to invest in S&P 500 in small chunk (unit) with starting amount of around $36.
The app’s ability that let user invest in S&P 500 for small amount of money is a breakthrough for Indonesian stock investors, as this will attract other investors to enter U.S market and encourage the public to join the stock market, which in turn will increase the financial literacy in the country.
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As a foreigner, getting involved in U.S stock market is plausible for both individual stock and index stock, even without having to pay for the remittance fee. It took a little digging and research to get the best deal, but thus far I am quite pleased with the brokerages that I’m using.
