Purchasing Overseas Stocks? Here's Why you need to Obtain a DBS Multi-Currency Account Today

We wrote quite extensively in the past concerning the usefulness of having a Multi-Currency Account. For a start, if you are a frequent traveller like our writer Dinesh, a multi-currency account can also help it will save you money when you're spending overseas.

Just recently, Dinesh put this theory into practice throughout his visit to Europe, where he deliberately tried to purchase his overseas spending through all sorts of methods, including using his DBS Multi-Currency Account, and you can read about his experiences and learnings here.

However, it isn't correct that only frequent travellers or internet buyers may benefit from having a multi-currency account.

If you're an investor who regularly invests in overseas stock markets such as the U.S., the U.K., Eurozone, or Hong Kong, then an account such as the DBS Multi-Currency Account will be a very useful tool to possess.

The Challenges Of Purchasing Overseas Stocks

Investing in overseas stock markets means having to invest in assets that'll be priced in foreign currency. If you purchase stocks such as Apple, Tesco, or Tencent, you will have to pay for your investments in foreign currencies such as the US Dollar (USD), Sterling Pound (GBP) or Hong Kong Dollar (HKD).

This means on top of making certain the companies make for good stock investments to start with, you also need to make sure that you are getting an attractive exchange rate for that currency they're exchanging.

For example, you may think that Apple stocks are good investment currently at USD 180.00. However, while the stock price, that is quoted in USD, might be attractive, you might find the present exchange rate, at USD 1 to 1.37 SGD, slightly high, when compared to exchange rate captured, at USD 1-to-1.32 SGD.

Here's an easy example to illustrate how exchange rate can produce a significant difference to the overseas investments.

If you based neglect the purely on price alone in USD, you would think that you are paying just 7.5% more for your Apple stocks in June 2021 (USD 185.11), when compared with buying it in January 2021 (USD 172.26).

However, should you also consider exchange rate fluctuation forever of the year, you'd observe that the USD has appreciated against the SGD since the start of year. Which means you would be paying about 9.9% more for the Apple stocks in June (SGD 251.7), when compared with buying it in January (SGD 229.11).

Traditional Brokerage Platforms

If you don't have foreign currencies to access readily, some brokerages provide the choice of settling your foreign market trades in SGD. However, you can examine if the forex rate you are getting is dependant on the current market rate.

When you purchase a foreign stock and select to pay in SGD, the broker converts all costs involved with trade from forex to SGD, at the current exchange rate. Which means that when the current exchange rate between foreign currency (e.g. USD) and local currency (i.e. SGD) reaches a historical high, this might erode the returns you could receive out of your overseas investments.

Another option is to transform SGD to forex beforehand when the rate is favourable, and put those funds inside your investment account. However, in many brokerages, no interest rates are paid on monies locked in an investment account.

The Solution: DBS MCA + DBS Vickers Account

To benefit from the better of all possible worlds, you simply need to deploy the DBS Multi-Currency Account using the DBS Vickers Online Account.

DBS Vickers is really a securities broker, along with a wholly owned subsidiary of DBS bank. It enables you use of 7 key global markets including the U. S., the U.K., and Hong Kong.

When you trade these overseas markets, you will need to purchase the stocks that you buy in foreign currencies. A DBS Multi-Currency Account will enable you to conveniently settle the trades in foreign currencies, in a favourable exchange rate that you have chosen earlier. Hence, you are able to 1) make the forex conversions once the rates are favourable for you and then 2) invest in the stocks when the costs are attractive.

Source: DBS MCA

DBS currently has a promotion where one can earn 2.50% p.a. interest for 4 months on your USD Fresh Funds using its DBS Multi-Currency Account. All you need to do would be to register on the internet and deposit fresh funds with a minimum of USD 10,000 by 31 August 2021, and you can start accumulating interest from September to December. If you were to convert fresh SGD to USD, additionally, you will obtain a S$25 FX rebate.

This way, apart from having the ability to receive a favourable exchange rate for the USD that you might requirement for your future stock investments, you also get to earn attractive interest on your USD today. All of this while, you will be utilising a multi-currency account with a brand that you are already acquainted with.