How to Buy US Stocks in Malaysia
To buy US stocks in Malaysia, open an account with a brokerage firm that offers international trading, such as eToro or RoboForex. Complete the necessary KYC procedures, fund your account, and start trading US stocks.
The New York Stock Exchange and the NASDAQ are two of the biggest and most well-known stock exchanges in the world, and they can both be excellent ways to gradually increase your wealth.
Investing in foreign equities may be advantageous for Malaysian investors. Among other things, it will diversify your investment portfolio and help you control currency fluctuations. Therefore, US stocks can be a great way to diversify and grow an investment portfolio in Malaysia, whether you're an experienced investor or just getting started. How to invest in them in Malaysia is explained in this article.
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Do I need a lot of money to start investing in US stocks?
Many online brokers do not have minimum balance requirements so you can start with any amount. However it’s best to start small until you gain experience.
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What paperwork do I need as a Malaysian to trade US stocks?
You typically need to provide a copy of your passport/IC and a document showing proof of address. You may need to fill out an application form and W-8BEN IRS tax form.
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Can I trade a fraction of shares like 0.5 shares for expensive US stocks?
Yes, many online brokers now allow you to buy fractional share quantities.
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How do I fund my brokerage account from Malaysia?
You can fund your account via bank transfer, credit/debit card, or e-wallets, depending on the broker's options. Some brokers support local bank transfers to efficiently fund your trading account.
Is it possible to invest in US stocks from Malaysia?
Yes, it is! You may start investing in the US stock market in one of the two ways listed below;
Use an international stock broker.
A brokerage company that allows Malaysian investors to buy and sell stocks anywhere in the world is known as an international broker. Additionally, you can directly open an account with a foreign broker who has a presence in Malaysia. International stock brokers are almost always the best choice for Malaysian investors who want to make direct investments in the US stock market.
Look for the same qualities in an international broker that you would want in any broker: a solid industry reputation, current security standards, good customer service, affordable pricing, robust trading tools, useful educational materials, and access to the markets you want to trade. Before opening the account, make sure you are aware of the costs. Therefore, do your homework before choosing the best international broker to invest in US stocks.
👍 Pros
•Typically, more stocks are accessible.
•Usually, other important markets are accessible (EU, UK, etc.).
•Lower fees.
•There is no capital gains tax.
👎 Cons
•Not normally regulated locally.
•Dividend tax of 30%.
•High risks.
Use local brokers.
Many domestic Malaysian stockbrokers have connections to US stock brokers. They carry out your trades and serve as an intermediary. Any such broker will allow you to set up an international trading account. You might have to submit a set of documents to open this account.
You might, however, be subject to limitations on the types of investment vehicles you can use or the total number of trades you can execute, depending on the brokerage firm. When brokerage fees and currency conversion costs are taken into account, investing can be expensive. Therefore, before opening an account, make sure you are aware of all the costs.
👍 Pros
•Locally regulated.
•No tax on capital gains.
•Low risk.
👎 Cons
•High brokerage fees.
•Limited access to more stocks.
•Multiple foreign currencies are not allowed (in some cases).
Rules and Regulation
Licensing in Malaysia
Forex trading in Malaysia is regulated by the Securities Commission Malaysia (SC) under the Capital Markets and Services Act 2007. The regulatory framework aims to ensure market integrity, investor protection, and financial stability in the Forex market. Investors should trade with licensed brokers, conduct due diligence, and stay informed about their rights and protection to mitigate risks associated with Forex trading.
Investor protection in Malaysia
Forex investors in Malaysia are protected by the Securities Commission Malaysia (SC), which regulates the Forex market and ensures the integrity of the financial system.
Malaysia has policies to protect Forex investors:
- licensing of Forex brokers;
- restrictions on Forex trading.
Taxation in Malaysia
Forex taxation in Malaysia is governed by the Inland Revenue Board Malaysia (IRBM), which administers the country's tax laws. Forex traders are required to report their trading income to the IRBM and pay income tax on their profits at the applicable tax rates. Malaysia has progressive income tax rates, ranging from 0% to 30%, depending on the individual's total taxable income.
How much should I invest?
If you are thinking about investing in the US stock market, the first thing that you need is sufficient capital. But how much is enough? What is the minimum budget requirement for you to invest in the US stock market?
You’ll need at least 221.85 MYR to begin investing. It is the typical starting investment amount needed to buy 1-2 cheap shares. The minimum threshold, however, also heavily depends on the broker of choice. At the same time, it is critical to focus on systematic investment rather than the initial investment amount in order to achieve the desired result.
The best brokers to buy US stocks in Malaysia
As a new trader, you need to choose the right online stock trading platforms or brokers to work with. Using the wrong broker could make a big dent in your investment returns. Thus, having a good broker will help you in your investment journey. Below is a list of the best stock brokerage firms and their fee structures for online stock trading in Malaysia.
RoboForex
RoboForex, which was established in 2009, is a multi-award-winning market maker, STP, and ECN online broker that offers traders from around the world access to over 3000 trading instruments across various asset classes, including stocks, shares, Forex, commodities, cryptocurrencies, indices, metals, energies, ETFs, and CFDs.
RoboForex uses eight liquidity providers who offer quick execution, tight spreads as low as 0 pip, and leverage up to 1:30. RoboForex is a well-known brand because it has more than 800,000 registered traders from 169 different nations. The variable spreads that Malaysian traders can anticipate from RoboForex as part of their overall trading costs will depend on the type of account they use, the financial instrument they trade, and the market conditions on the trading day.
The well-known MetaTrader platform, the expert cTrader platform, and RoboForex's own R Trader platform are all available. The R StocksTrader account feature gives Malaysian traders exclusive access to the R StocksTrader proprietary trading platform, designed specifically for stock trading and investment.
For deposits over 44,400 MYR, RoboForex charges a fee of just 0.11 MYR per share and 0.040 MYR per share. RoboForex Ltd. is carefully regulated by the Belizean International Financial Services Commission. RoboForex adheres to strict anti-money laundering and know-your-customer policies. Among other requirements, these policies state that all clients' identities must be confirmed and that payments from third parties or unidentified sources are not accepted.
Features
Using CopyFX, an advanced copy trading platform, Malaysian traders can automatically copy the trades of profitable traders to their trading accounts.
No cost VPS server.
Leveraged up to a 1:20 ratio.
Another well-liked trading platform that suits the trading goals of seasoned traders and offers quick execution speeds and trading strategies is cTrader, which is offered by RoboForex.
44.40 MYR is the bare minimum deposit.
IC Markets
One of the top stock brokers for traders from Malaysia is IC Markets, an Australian-based forex CFD broker that is regulated. Through IC Markets, Malaysian investors have access to over 10,000 securities from some of the most well-known companies in the world, including Facebook, Apple, and BHP Billiton. Additionally, you can trade over 730 large-cap stock CFDs with fast execution on the NASDAQ, ASX, and NYSE stock exchanges.
ASIC, FSA, and CYSEC are just a few of the numerous international financial regulators that oversee IC markets. In addition to stock trading, it is also possible to engage in forex, futures, and commodity trading. Because of its high leverage, small spreads, and low commission costs, IC Markets draws traders. For a better trading experience, IC Markets offers traders three cutting-edge trading platforms: MetaTrader 4, MT5, and cTrader.
888 MYR is the required minimum deposit amount. IC Markets provides traders with a minimum leverage of 1:20 and a maximum leverage of 1:50. Traders with a high-risk tolerance and the ability to trade with low volatility typically prefer high leverage, while those with small initial deposits prefer low leverage.
Trading fees at IC Markets are divided into various account types. The commission fees for the Raw Spread account, formerly known as the True ECN account, are 15.54 MYR per lot, while the commission fees for the Raw Spread account, also known as the cTrader Raw account, are 13.32 MYR per lot. The standard account is not subject to any commission charges.
Features
Social trading sites like ZuluTrade and MyFXbook are among those that the broker lets users trade on.
The platform's sophisticated trading modules, such as the trade risk calculator, provide traders with guidance while they trade.
You can specify a maximum loss using the stop-loss order feature.
Depending on your trading experience, the website offers a variety of account types and trading platforms.
Its advanced margin call feature prevents you from having a negative balance by terminating the trade when it discovers that your balance is null.
eToro
There aren't many places where you can trade stocks and cryptocurrencies together, and the ones that do usually don't have a wide variety of cryptocurrencies. One of the best selections of digital assets that can be combined with stock investing is available on eToro.
eToro offers fractional share purchases along with zero-commission stock trading. Additionally, eToro provides a virtual brokerage account, so you can test the platform out without risking any real money if you're new to investing or just want to see if the platform is right for you. The Financial Industry Regulatory Authority (FINRA), the Financial Crimes Enforcement Network (FinCEN), and the Financial Conduct Authority (FCA) in the United States and the United Kingdom, respectively, regulate eToro on a global scale.
For Malaysians who prefer a more communal trading experience, this platform's social features and active community make it a good choice. eToro is a winner for its user-friendly copy-trading platform, where users can copy the trades of seasoned investors or gain access to premium benefits by disclosing their own trading tactics.
For trading stocks and ETFs, eToro doesn't charge any fees, but buying or selling cryptocurrencies carries a 1% fee. Over 2,400 stocks, including foreign equities and ETFs, are available to Malaysian investors. Additionally, it enables users to purchase fractional shares; as a result, you could decide to purchase 444.25 MYR worth of a particular stock as opposed to a full share. Malaysian investors have access to commodities like gold and silver as well as sophisticated trading features like margin and leverage.
Features
You can automatically copy and trade using eToro's CopyTrader based on the actions of other traders.
1:30 of leverage maximum.
The minimum deposit amount is 222.47 MYR.
eToro provides a top-notch mobile user experience. High usability and nearly identical features are offered by eToro on both its web platform and its mobile app, which multi-device users will appreciate.
The best stock trading apps in Malaysia compared
| Broker | Minimum Deposit | Number of Stocks | Commission | Leverage |
|---|---|---|---|---|
|
RoboForex |
$10 |
3000 stocks, + over 9000 CFDs |
From $0,009 per lot |
Up to 1:20 |
|
IC Markets |
$200 |
10,000+ stocks and CFDs |
Spread based |
Up to 1:20 |
|
eToro |
$50 |
2,400+ |
No commission on stocks |
Up to 1:30 |
How to start trading US stocks in Malaysia?
To open an investment account with an online broker, follow these steps, which must be done online:
First, decide which regulated broker best suits your investment objectives.
Through the broker's app or by email, upload proof of identity and address (such as water and electric bills).
Choose the appropriate base currency for the account. Once the account is opened, changing it with some brokers can be difficult. The base currency for trading accounts can be one of the following: US dollars (USD), euros (EUR), British pounds (GBP), Swiss francs (CHF), or Australian dollars (AUD). Almost all of them provide the option to pay in euros or US dollars.
Cash must be deposited after the broker has given the account its approval. Typically, credit cards, bank transfers, or eWallets are used for deposits and withdrawals. Each broker will have a different range of deposit options. A crucial point to note is that each of the brokers listed above permits you to use a simulator on their platform or to test out a demo account for free. In other words, you can sign up for a demo account to test the software before deciding whether or not to deposit real money.
You can begin trading US stocks in Malaysia once you have made your deposits.
Is investing in US stocks worth it?
Due to the market's many opportunities for investing in the leading industries of technology, finance, automobiles, and gold, investing in US markets aids in portfolio diversification. You become independent of the Malaysian stock market and economy by investing a portion of your assets in such markets.
The market capitalization of firms like Amazon, Tesla, Facebook, Alphabet (Google), Apple, Hathway, JP Morgan Chase, and others, which have only outperformed themselves every year and make up 27.5% of the total market capitalization, is what the S&P 500 index is based on. The S&P 500 typically offers returns of up to 10%, so if you're looking to invest for the long term and ensure consistent dividend payments, you'll want a stake in these businesses. However, keep in mind that investing poorly can result in losses.
What are the best stock trading brokers for beginners in Malaysia?
For beginners, stock trading brokers with copy trading capabilities and good educational materials are ideal. For example, RoboForex and eToro.
Can I trade with an international stock broker?
Yes, they are completely legitimate if they are regulated and accept Malaysian customers, but you should take care to follow local laws.
Do I pay taxes for stock trading in Malaysia?
Definitely not! You are not required to pay capital gains tax in Malaysia on any sales made from your investments. Additionally, this tax system does not apply to your capital assets. The Malaysian Income Tax Act of 1967 states that the government does not tax profits or gains from stock sales that result from price increases.
Team that worked on the article
Winnifred Emmanuel is a freelance financial analyst and writer with years of experience in working with financial websites and businesses. Her expertise spans various areas, including commodities, Forex, stocks, and cryptocurrency. Winnifred tailors her writing to various audiences, including beginners, while also providing useful insights for those who are already familiar with financial markets.
Dr. BJ Johnson is a PhD in English Language and an editor with over 15 years of experience. He earned his degree in English Language in the U.S and the UK. In 2020, Dr. Johnson joined the Traders Union team. Since then, he has created over 100 exclusive articles and edited over 300 articles of other authors.
Mirjan Hipolito is a journalist and news editor at Traders Union. She is an expert crypto writer with five years of experience in the financial markets. Her specialties are daily market news, price predictions, and Initial Coin Offerings (ICO).