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How Much Can Commission Fees Affect Your Returns If You Invest A Small Amount Regularly?

If you want to invest a small amount regularly, commission fees are something that you have to watch out for.

This article was written in collaboration with Tiger Brokers Singapore. All views expressed in this article are the independent opinion of based on our research. is not liable for any financial losses that may arise from any transactions and readers are encouraged to do their own due diligence. You can view our full editorial policy here.

When it comes to investing, there are two main options we can take: let someone invest on our behalf, or invest on our own.

When someone (e.g. a fund manager) invests on our behalf, we pay an annual management fee. This could easily be 1% p.a. or more of our investment portfolio value. For example, if our portfolio value is worth $100,000 today, then we would pay $1,000 in management fees each year. In a hypothetical scenario where the portfolio value increases by just 1% per year in the next 20 years, then we will pay $20,000 in fees. This is obviously a hefty sum.

Alternatively, we can also invest on our own. When we invest on our own, the advantage is that we don’t pay any annual management fee. Instead, we incur a commission fee when we buy or sell through the brokerage firm that we use.

As we look at stock brokerage account fees in Singapore, we can see that the commission fees vary across different brokerages. Low-cost brokerage firms such as Tiger Brokers charge just a minimum of $1.99 (commission & platform fees) while traditional brokerages in Singapore may charge a minimum of $25 per trade, or about 10 times more.

Here’s a look at the standard pricing details for Tiger Brokers for U.S. stocks and ETFs.


The question is, as a self-directed investor who invests a small amount regularly for the longer term, how much of our investment would be lost to commission fees?

To calculate this, we will make some assumptions

– Investor invests $250 a month, over a period of 20 years. This is before taking into consideration transaction cost.

– A linear return of 4% per annum (p.a.). Returns are calculated monthly.

– Investor only invests during this period. The investor does not sell.

We will calculate the returns that an investor has at the end of 20 years based on two commission fees payable – $25/transaction and $2/transaction.

Scenario 1: Paying $25/transaction

To be clear, this should be a hypothetical scenario. If you are intending to invest $250 a month but are paying $25/transaction (10% of your capital), this means that you are only investing $225 a month. In our opinion, you ought to seriously reconsider if this is an efficient way to invest.

For discussion’s sake, let’s find out how much the investor will have after 20 years.


For scenario 1, the investor will have $82,524 after 20 years. They would have invested $54,000 over 20 years and paid about $6,000 in commission fees, or about $300 a year ($25 per month).

Scenario 2: Paying $2/transaction

In scenario 2, the investor also invests $250 a month but pays just $2/transaction. This means that they invest $248 a month.


For scenario 2, the investor will have $90,960.11 after 20 years. They would have invested $59,520 over 20 years and pay $480 in commission fees, or just $24 per year ($2 per month). This is $5,520 less in commission cost as compared to Scenario 1.

More importantly, the savings in commission fees that the investor enjoys enables him/her to invest more each month. In scenario 2, the investor gets about $8,436 more after 20 years.

The key point to emphasise here is that with a lower commission paid, we get to invest more. This means that the returns we receive at the end of the investment period aren’t just the commission we saved on, but also the returns that we earned from investing the savings in our commission.

Read Also: How Transaction Costs Can Affect Your Investment Yield

Of course, the perfect scenario will be that we don’t need to pay any commission fee at all. If we invest the full $250 each month and assuming the same return of 4.0% p.a., we will have about $91,694 after 20 years.

Enjoy Lifetime Zero Commission Fees for Unlimited Trades On US Stocks Via Tiger Brokers

While choosing a low-cost brokerage firm like Tiger Brokers is an easy way to substantially reduce our commission fees for the trades that we make, we can do even better if we can enjoy zero commission fees for our trade.

This is, in fact, what Tiger Brokers is offering to investors. Tiger Brokers account holders can now unlock and enjoy ^lifetime zero commission for unlimited trades on US stocks. To be eligible for this, simply refer a friend and get your friend to deposit SGD 100 to qualify. It’s that simple.

To be clear, zero commission doesn’t mean that the trades are completely free. As stated on the Tiger Brokers pricing page, there are other fees such as platform fee, settlement fee, and SEC membership fee (for sell orders only) that may still be occurred. This is similar to most other brokerages where the commission is not the only type of fee charged.

If you have yet to open an account with Tiger Brokers and would like to do so today, you can sign up here and enjoy special sign-up promotion that consists of perks such as zero-commission trades for U.S. stocks for 180 days, market research videos, 1 free Grab Share (NASDAQ: Grab) and more free shares (via sure win draw) + stock voucher of SGD5 (for Singapore stocks only). The sign-up benefits may change so do check out the Tiger Brokers promo landing page to see what are the perks that you can enjoy if you are opening your account for the first time.

Zero Commission Fees Give Us Greater Flexibility To Cater For Different Investment Strategies

Besides saving on our commission fees, paying zero commission fees for our US trades also means that we can utilise our Tiger Brokers account for different investment strategies. For example, as shorter-term investors, we can buy and sell US stocks frequently and profit from small price movements in the market, as opposed to just buying and holding stocks for the long term. This works because we don’t have to worry about commission fees eating into our returns and can focus on trading more efficiently.

We can also spread our capital and trade a variety of stocks simultaneously, allowing us to easily diversify our investments by putting a small amount of capital in multiple stocks, as opposed to investing a large sum in just a handful of companies.

Beyond Investing: Increase Our Knowledge With Tiger Brokers

Even if we don’t intend to make transactions all the time, the Tiger Broker App – Tiger Trade, can still be an invaluable app on our phone. Through Tiger Trade, we can stay updated on what is happening in the financial markets and news on stocks that are on our watchlists. Macroeconomic news can be found on the app along with an investment calendar that tells us important dates to take note of including major events, financial report releases and upcoming IPOs.

To facilitate an environment where users can learn from one another, Tiger Brokers offers a community (within its app as well) where we can have stock discussions with other like-minded investors and traders. Tiger Live webinars that help keep the community up to date with the latest market development and trends. In the long-term, the aim is to have knowledgeable investors that will help develop a stronger and more sustainable investing community.

Find out more and sign up and open an account with Tiger Brokers today.

Read Also: Step-By-Step Guide To Opening An Account With Tiger Brokers Singapore

^Promotion Eligibility: To remove commissions on US trades, users must refer one new user who deposits at least $100 into their own account. The first 10 referrals will also earn the user one GoPro share each, and Tiger Brokers (Singapore) will reward the user with $10 vouchers for each successful referral, with no limit. While there is currently no deadline for the lifetime zero commissions campaign, the promotional welcome bundle  (Under the welcome bundle, when investors deposit SGD $2,000 within 7 days, they receive: Another SGD $5 Cash Voucher and 1 chance to win a Grab share) will end on July 1, 2022.