{"id":46127,"date":"2026-03-31T17:23:30","date_gmt":"2026-03-31T09:23:30","guid":{"rendered":"https:\/\/www.phillipnova.com.sg\/?post_type=educational_articles&p=46127"},"modified":"2026-04-14T18:41:15","modified_gmt":"2026-04-14T10:41:15","slug":"beyond-commissions-the-hidden-costs-of-investing","status":"publish","type":"educational_articles","link":"https:\/\/www.phillipnova.com.sg\/cn\/educational_articles\/beyond-commissions-the-hidden-costs-of-investing\/","title":{"rendered":"Beyond Commissions: The Hidden Costs of Investing"},"content":{"rendered":"
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When investing in overseas stocks or ETFs, most retail investors focus on commissions \u2014 the visible fee charged when you buy or sell. But in reality, commissions are only a small part of the total cost.<\/p>\n

One of the most significant \u2014 yet often overlooked \u2014 costs is FX (foreign exchange) conversion fees<\/strong>. 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.<\/p>\n

In this article, we\u2019ll start by breaking down what FX conversion fees are and how they work<\/strong>, so you can clearly see where these costs come from. We\u2019ll 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<\/strong> \u2014 so you can make more informed decisions and keep more of your returns.<\/p>\n<\/div>\n<\/div>\n

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FX Conversion Costs: A Hidden Expense
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When you invest in foreign stocks or ETFs, your funds need to be converted into another currency \u2014 for example, from SGD to USD when buying US stocks.<\/p>\n

Each conversion comes with an FX spread \u2014 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.<\/p>\n<\/div>\n

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Step-By-Step Example: Trading a US Stock<\/strong><\/p>\n

Let\u2019s see how these costs play out in a real-life scenario.<\/p>\n\n\n\n\n\n\n
Step 1: Deposit Funds<\/strong><\/p>\n
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  • You deposit S$10,000<\/strong> into your trading account to invest in a US-listed stock.<\/li>\n<\/ul>\n<\/td>\n<\/tr>\n
Step 2: Convert to USD<\/strong><\/p>\n
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  • To trade the US stock, you must convert SGD \u2192 USD.<\/li>\n
  • On NOVA, FX conversion cost = as low as 0.12%\n
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    • For S$10,000, that\u2019s only S$12<\/li>\n<\/ul>\n<\/li>\n
    • Elsewhere, FX conversion cost could range from 0.3% to 0.5%\n
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      • For S$10,000, that’s S$50<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n

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        Alternatively, if you don\u2019t convert in advance, some trading platforms automatically convert on trade and may charge interest on any currency deficit<\/strong>, which adds extra cost.<\/td>\n<\/tr>\n

Step 3: Buy the US Stock<\/strong><\/p>\n
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  • On NOVA, commission = 0.01% (min of USD3.88 per order) or Flat Fee of USD0.38 per fractional order<\/li>\n<\/ul>\n

    Notice that even for a large trade, the commission is much smaller than FX conversion costs<\/strong>.<\/td>\n<\/tr>\n

Step 4: Convert Back to SGD<\/strong><\/p>\n