For Philippine residents who want to venture into the international stock market, there are really just a few legitimate options available. For this matter, I don’t consider the likes of eToro and Abra as legitimate platforms for the serious investor or trader. The top three choices for Philippine residents are Charles Schwab, TD Ameritrade, and Interactive Brokers (IBKR). Since Charles Schwab is acquiring TD Ameritrade, I’m only covering Schwab and IBKR. So which one is better for Philippine residents?
(Note that if you’re a Philippine resident and also an American citizen, many of the issues raised here are not applicable to you.)
Continue reading Best international broker for Philippine residents: Charles Schwab vs Interactive Brokers
When I first looked into trying my hand in the Philippine stock market and opening an online brokerage account, I was pleasantly surprised by the number of online platforms available to retail investors. There are 31 online brokers on this list on the Philippine Stock Exchange website. Quite a few are backed by major Philippine banks like BDO, BPI, and Metrobank, while many more are independent brokerage houses. At least nine of them run on the PSETradex platform provided by the Philippine Stock Exchange itself.
Before this, my only experience with trading stocks was in the U.S. with brokers like Ally, Robinhood, and now Charles Schwab. Recent competition among U.S. online brokers have driven down the cost of trading commissions to the bare minimum: $0. Charles Schwab charged $29.95 per trade in 1998. Before dropping the rate to $0 in October 2019, it was charging $4.95 per trade.
Continue reading On online trading commissions in the Philippines
In the US, losses incurred from selling stocks from losing investments can be used to lower capital gains from winning trades.Short-term capital gains are taxed as though they are ordinary income which is taxed based on a progressive tax table. Near the end of the year, if you already have realized some gains (that you’ll have to pay taxes on) and are still holding on to some losing positions, you may decide to cut your losses and sell your losing stock positions. This will allow you to harvest losses to offset some of your gains, thereby reducing taxes that you’ll have to pay. If you don’t have any gains to offset, you can also reduce your ordinary income (wages, etc.) by up to $3,000 of your losses. In a way, this may encourage you to stop holding to that losing stock and cut your losses, and also reduce your tax bill. On the other hand, the stock might recover and you’ll miss out on it. You’re not allowed to buy the stock again within 30 days of selling it, and still be able to harvest the loss, because of wash sale rules.
Continue reading Tax-loss harvesting in the Philippine stock market?
In the process of moving from the US back home to the Philippines, I had to make certain arrangements with regard to my financial assets in the US. I maintained taxable equity accounts with Wealthfront and Robinhood, both of which do not cater to non-resident aliens. While I was a “resident alien for tax purposes” while I was living in the US, I am now properly classified as a non-resident alien after returning to the Philippines.
Many such brokerages in the US do not cater to non-resident aliens and even US citizens living abroad because there are a lot of regulations to comply with (FATCA, among others). Fortunately, the bigger online brokers like Charles Schwab, TD Ameritrade, and Interactive Brokers do make their services available to non-resident aliens.
Continue reading Opening a Charles Schwab Brokerage Account from the Philippines