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Step-By-Step Example: Trading a US Stock
Let’s see how these costs play out in a real-life scenario.
Step 1: Deposit Funds
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Step 2: Convert to USD
Alternatively, if you don’t convert in advance, some trading platforms automatically convert on trade and may charge interest on any currency deficit, which adds extra cost. |
Step 3: Buy the US Stock
Notice that even for a large trade, the commission is much smaller than FX conversion costs. |
Step 4: Convert Back to SGD
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Total Costs summary
| Cost Type | Estimated costs (NOVA) |
Estimated costs (Elsewhere) |
| Commission | 0.01% (min USD3.88 per order) or USD0.38 per fractional order | 0 |
| FX Conversion SGD → USD | S$12 | S$50 |
| FX Conversion USD → SGD | S$16 | S$64 |
| Total FX Costs | S$28 | S$114 |
| Custodian Fees | S$0 | S$0 |
| Total Costs | ~S$62 | ~S$114 |
Even though the commission was $0, the hidden FX costs are easily much higher, quietly reducing your overall returns. And on NOVA, you don’t pay custodian fees, which further helps reduce costs.
Other Costs to Watch Out For
After understanding how FX conversion impacts your trades, it’s important to recognise that it is just one part of the overall cost structure. Investors may also encounter the following:
Platform Fees
Even if a platform advertises “commission-free” trading, there may still be underlying costs for using the platform and its tools. These can include:
- Monthly or annual account maintenance fees
- Data feed or market access fees
- Inactivity fees
While individually small, these charges can accumulate over time and gradually reduce your net returns.
Custodian Fees
Some brokers — particularly those using CDP (Central Depository) accounts — charge a custodian or safekeeping fee for holding your shares.
- Typically charged as a small percentage of your portfolio value
- Applies regardless of how frequently you trade
As a non-CDP broker, Phillip Nova does not charge custodian fees on NOVA. Your shares are held within our broker account, so there are no additional storage costs.
Additional Costs to Be Aware Of
Beyond FX, platform, and custodian fees, investors should also consider:
- Fund Management Fees / TER (for ETFs or mutual funds): Ongoing annual fees that are deducted from the fund’s value and compound over time
- Interest on Shares Financing: Borrowing to invest introduces financing costs and amplifies both gains and losses
Why FX Costs Matter More Than You Think
Among all these costs, FX conversion fees are often the most significant for international investors.
Even if commissions are low — or zero — FX spreads apply to every conversion. Over time, these costs can accumulate into hundreds or even thousands of dollars, especially for active investors or those building positions gradually.
By using NOVA’s competitive FX conversion rates, investors can reduce the cost of every trade. This means more capital remains invested, allowing your portfolio to compound more efficiently over the long term.
Takeaway: Investing Is More Than Just Commissions
Successful investing isn’t only about choosing the right assets — it’s also about managing costs.
- Commissions are visible, but FX spreads, platform fees, custodian fees, and financing costs often go unnoticed
- For global investing, FX conversion costs can exceed all other fees combined
- Choosing a platform with competitive FX rates, minimal fees, and no custodian charges helps keep more of your capital invested
Every dollar saved on hidden costs is a dollar that continues to grow.
