Beyond Commissions: The Hidden Costs of Investing

31 3 月 2026

When investing in overseas stocks or ETFs, most retail investors focus on commissions — the visible fee charged when you buy or sell. But in reality, commissions are only a small part of the total cost.

One of the most significant — yet often overlooked — costs is FX (foreign exchange) conversion fees. Every time you convert your money from SGD into another currency (such as USD to buy US stocks), this fee is applied. While it may seem small on a single transaction, it can quietly add up over time and meaningfully impact your overall returns.

In this article, we’ll start by breaking down what FX conversion fees are and how they work, so you can clearly see where these costs come from. We’ll then explore other common fees investors may encounter, including platform fees, custodian fees, fund management fees (TER) for ETFs and mutual funds, and interest on shares financing — so you can make more informed decisions and keep more of your returns.

FX Conversion Costs: A Hidden Expense

When you invest in foreign stocks or ETFs, your funds need to be converted into another currency — for example, from SGD to USD when buying US stocks.

Each conversion comes with an FX spread — the difference between the rate you get and the actual market rate. While this may appear small, typically around 0.5% to 1%, it can quickly add up. Over time, FX conversion costs can exceed the total commissions paid on your trades, quietly eroding your overall returns.

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

You deposit S$10,000 into your trading account to invest in a US-listed stock.

Step 2: Convert to USD

To trade the US stock, you must convert SGD → USD.
On NOVA, FX conversion cost = as low as 0.12%
- For S$10,000, that’s only S$12
Elsewhere, FX conversion cost could range from 0.5%
- For S$10,000, that’s S$50

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

On NOVA, commission = 0.01% (min of USD3.88 per order) or Flat Fee of USD0.38 per fractional order

Notice that even for a large trade, the commission is much smaller than FX conversion costs.

Step 4: Convert Back to SGD

After selling the stock, you convert USD → SGD.
Another FX spread applies. On NOVA, FX conversion cost = as low as 0.12%
- For USD 10,000, assuming exchange rate of 1.28 for USD/SGD, cost = approx. S$16
Elsewhere, FX conversion cost could range from 0.3% to 0.5%
- At 0.5% with an exchange rate of 1.28 for USD/SGD: For S$10,000, that’s approx. S$64

Total Costs summary

Cost Type	Estimated costs (NOVA)	Estimated costs (Elsewhere)
手续费	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.

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