Investing in U.S. Stocks: Not Always a Friendly Option for Singapore Residents 在新加坡投资美股的风险
In Singapore, buying local stocks has clear tax advantages: no dividend tax, no capital gains tax, and no personal income tax on investment income. Plus, there’s no inheritance tax. Many assume that investing in U.S. stocks offers the same benefits, but the reality is quite different.
For Singapore residents, U.S. stocks come with significant risks, especially for long-term investors. Here are some key considerations:
1. Dividend Tax Woes
U.S. dividends are taxed at 30% for Singapore residents. While this isn’t a concern for many popular tech stocks that don’t pay dividends, it severely impacts the appeal of dividend-paying stocks and related ETFs. For example, an ETF offering a 5% annual dividend yield will leave you with just 3.5% after tax—barely better than a USD fixed deposit.
2. Inheritance Tax Hits
If a Singapore resident holds U.S.-listed stocks and passes away, any holdings above USD 60,000 are subject to an 18-40% inheritance tax. This isn’t a tax on dividends—it’s a direct cut of your stock value, which can be significant.
3. The Ireland ETF Solution
A workaround for ETF investors is to avoid U.S.-listed ETFs and instead choose Ireland-listed equivalents. For example, popular indices like the S&P 500 have ETFs listed in both the U.S. and Ireland.
Advantages of Ireland ETFs:
Dividend tax rate is only 15%.
No inheritance tax.
Some Ireland ETFs reinvest dividends, effectively bypassing the 15% tax altogether.
Drawbacks:
Ireland ETFs often have smaller fund sizes and lower liquidity (though this is less of a concern for small investors).
Management fees are slightly higher compared to U.S.-listed ETFs.
4. What Happens to Your Stocks After You’re Gone?
One often-overlooked issue is the difficulty of managing stocks after death. Contrary to popular belief, giving your family access to your brokerage account credentials to sell the stocks isn’t always a viable option.
For most countries and brokers, transferring ownership to heirs is a complex and time-consuming process. Perhaps Investing in Singapore-listed stocks (especially through CDP or SRS accounts) can make inheritance a little less stressful for your loved ones.
(Disclaimer: This article was originally written in Chinese and translated into English by the almighty ChatGPT with some manual editing. In case of any discrepancies, the original Chinese version should be considered the preferred source. Below is the Chinese version)
在新加坡买本地股票，一无股息税，二无资本利得税。资产所得也不需要交个人所得税，而新加坡也没有遗产税。这使得很多人常常假定买美股也同样如此
然而实际上，美股对新加坡居民并不友好。对长期投资者，其长期风险不可忽视。以下略述一二：
一、对于新加坡居民，美股的股息/分红所得要交30%的税。这对于那些热门科技股没什么，因为他们普遍不分红，但是30%的税率，使得几乎所有的分红股和相关的ETF都丧失吸引力。举例来说，假定一个高分红的ETF年息是5%，扣税后只剩3.5%，还不如美元定存
二、对于新加坡居民，购买在美国上市的股票，如果不幸去世，6万美元以上的部分，要交18-40%的遗产税。注意，这个不是针对股息征税，而是直接对着股本切一刀，力度非常大
三、对于ETF而言，一个解决办法，是不直接买在美国上市的ETF，而是买对应的在爱尔兰上市的ETF。比如说常见的标普500等指数，除了在美国有众多ETF可以选择之外，在爱尔兰也同样有。买爱尔兰ETF，一来股息的税率只有15%，更重要的是没有遗产税。一般来说，对于同一个指数，爱尔兰ETF会有多个版本，除了币种不同，对于股息的处理也不一样。既有发股息然后收15%的，也有将股息用于再投资的，这样就把15%也规避了
四、不过一般来说，对同个指数而言，爱尔兰ETF盘子小，流动性稍低（但对一般小散户也不算啥），管理费用通常要比美股贵一些
五、最后要提的一点，是人死了之后股票怎么办，是一个值得重视但常常被人忽视的问题。对于大多数国家大多数券商而言，contrary to popular belief，让亲人用你的账户密码卖掉股票转到银行账户，并不可行。继承人取回逝者的股票，通常是一个繁琐、复杂而费心费力的过程。在这方面，只投资新加坡股票（尤其是用CDP或SRS），可能会让这个过程不那么痛苦