Exchange Traded Funds (ETFs) are basically a basket of stocks that are passively managed to track an index and listed on the exchange (such as the Singapore stock Exchange). Some of the advantages include low management fee (0.5% and above) and broad diversification, allowing you to invest in many stocks without burning a hole in your wallet.
Having said that, there are a couple of ETFs that are shariah compliant for Muslims to invest in for as low as S$50 per unit and that is what this guides hope to help you get.
But before that, do join our telegram group for the latest update!
First and foremost, we will be using the Tiger Broker App due to the quickness and simplicity. If you are ready to invest, then let's start:
1. Download the app on your device with the link in the button:
2.1 In here, you will need to key in your key details:
Country of birth,
Country of residence,
tax residency and whether you have a tax ID.
For Singaporeans and Permanent residents, the tax ID is your IC (S*******F).
2.2 If you have Singpass on your phone, simply open account with Myinfo so that you can skip the manual filling. It is much faster to use Singpass since all your necessary details will be filled out.
2.3 For account types, use cash account so that you can fund your account directly, like a debit card. Cash accounts will not allow you to trade in options and futures. For Muslim investors, having a margin account will incur interest on your Tiger account since you are borrowing money from Tiger to purchase stocks.
In the trade type, it will ask you how many years of investment experience do you have as well as your investment horizon, so indicate it based on your personal preference.
Click the open fund mall account so that you can purchase mutual funds/unit trusts in the future directly.
2.4 Simply key in your estimated total assets in USD as well as your annual income in USD.
Then key in your source of wealth as well as investment objective. While these are standard questions it feeds into Tiger Broker’s customer data.
As for tax information, click W-8BEN as it basically declares that you are not a US resident and you are the owner of the account.
CRS abbreviates to Common Reporting Standard and is needed due to the different jurisdiction reporting of taxes
2.5. Indicate your investment experience as well as whether you have ever traded any of these securities. Again this is standard information for Tiger Broker to comply with regulation.
2.6 As usual, do read the terms & conditions before you click check the box on “I have read and understand and agree to accept the terms of all the above documents”. Then click continue.
2.7 Prepare your Identity Card whether it’s your NRIC or 11B or drivers licence and take a picture of it. Then click continue.
2.8 Simply sign using your finger, as you would with a pen and click upload.
2.9 Get yourself in a lighted area and take a selfie for verification. This allows Tiger Broker to know that the one opening the account is you.
2.10 Now you just need to wait for three hours or less for the account to be processed. Also, Tiger Broker will only process your application on weekdays.
Time To Buy your first Exchange Traded Fund!
3.1 Once your application has been processed, you can now start to look for ETFs that are shariah compliant like the one in the picture. The long name in white is still an acronym, example:
ISHRS MSCI WRLD ISLMIC ETF USD stands for Ishares Morgan Stanley Capital International World Islamic Exchange Traded Funds US Dollars. You can look for the full name in the profile when you click the name.