How to Invest in the Nasdaq Index? Complete Guide for Taiwanese Investors

Image Source: pexels

Want to ride the US tech growth train? Investing in the Nasdaq Index is an excellent starting point. This article skips theory and gives you three practical investment methods directly. Choose the one that fits your situation quickly.

🚀 Quick Selection Guide

• If you’re a complete beginner and hate complicated procedures 👉 Go straight to Method 1
• If you’re a small-capital investor who wants to invest small amounts in TWD 👉 Jump to Method 3
• If you’re an active trader who wants to save the most on costs 👉 Study Method 2 carefully

Key Takeaways

• Investing in the Nasdaq Index usually means investing in the “Nasdaq-100 Index,” which includes the top 100 large non-financial US tech companies.
• Taiwanese investors have three main ways to invest in Nasdaq: through domestic brokerage complex orders, opening a direct overseas brokerage account, or buying a Taiwan-listed ETF that tracks the Nasdaq Index.
• Complex orders are simple and keep funds in Taiwan but have higher fees; overseas brokers have low fees but require international wire transfers and mostly English interfaces.
• Taiwan-listed ETFs (e.g., 00662) allow small-amount TWD investments and regular savings plans, perfect for small-capital investors, but come with internal expense ratios.
• Contracts for Difference (CFDs) are high-risk and unsuitable for beginners — they are leveraged short-term trading instruments, not long-term investments.

Understanding the Nasdaq Index: Composite vs. Nasdaq-100

Image Source: unsplash

Before putting money in, clear up a common misconception. When people talk about investing in the “Nasdaq Index,” they almost always mean the “Nasdaq-100 Index,” not the “Nasdaq Composite Index.” These two are very different.

Nasdaq Composite vs. Nasdaq-100

Simply put, the Composite Index is a giant basket containing every company listed on NASDAQ — more than 3,000. The Nasdaq-100 is an elite selection of the largest 100 “non-financial” companies.

Quick comparison table:

Why Is the Nasdaq-100 More Popular?

Because it focuses on the world’s most innovative and high-growth leaders. When you invest in the Nasdaq-100, you instantly own shares of giants like Apple (Apple), Microsoft, Amazon, Nvidia (Nvidia), and Tesla (Tesla). These companies not only shape daily life but are major drivers of global economic growth — making them the focus of investors worldwide.

💡 Quick Fact: US Stocks Four Major Indices Besides Nasdaq, the US market has three other major indices for a full market view:

• Dow Jones Industrial Average: Represents 30 large US blue-chip stocks.
• S&P 500: Broadly represents 500 large US companies — considered the market benchmark.
• Philadelphia Semiconductor Index: Focuses on the semiconductor sector.

The Representative ETF: Introduction to QQQ

The most direct way to invest in the Nasdaq-100 is through an ETF that tracks it — the most famous and representative being Invesco’s QQQ.

• Full Name: Invesco QQQ Trust
• Inception Date: March 10, 1999
• Tracks: Nasdaq-100 Index

QQQ has extremely high liquidity and is one of the most traded ETFs in the US. More importantly, its total expense ratio is only 0.20% — saving significant costs for long-term holders and making it an excellent vehicle for large-cap tech exposure.

Method 1: Domestic Brokerage Complex Orders

If you’re a beginner who finds opening overseas accounts and international wires troublesome, “complex orders” through a Taiwanese broker are tailor-made for you. It lets you take your first step into US stocks in the most familiar way.

What Are Complex Orders?

Complex orders literally mean “re-delegation.” You delegate your domestic broker, who then re-delegates to their US partner broker to buy US stocks or ETFs for you. Throughout the process, you only deal with your local broker — just like trading Taiwan stocks.

Pros & Cons Analysis

Complex orders have clear advantages, but you must also understand the trade-offs.

• 👍 Advantages
  • Full Chinese interface: From account opening to trading — everything is in familiar Chinese.
  • No overseas transfers needed: Convert currency directly in the broker app — money stays in Taiwan, safe and hassle-free.
  • No language barrier with support: Call your domestic broker’s customer service directly if issues arise.
• 👎 Disadvantages
  • Higher fees: The biggest drawback — trading costs are generally higher than overseas brokers.
  • Minimum fee per trade: Most brokers have a minimum commission — less cost-effective for small trades.

Complex Order Fee Structure

When comparing complex order fees, focus on both the “commission rate” and “minimum fee per trade.” Here are reference rates from major brokers to give you a quick idea:

Note: Rates above are advertised references — actual fees may vary with promotions or trading volume. Always confirm with your broker before trading.

Account Opening & Trading Process

Investing in the Nasdaq Index via complex orders is very straightforward — basically three steps:

1. 📂 Open complex order account: Apply online or in-branch to add complex order functionality to your existing Taiwan stock account.
2. 💵 Convert & deposit: Use the broker app to convert TWD to USD and deposit into your settlement account.
3. 📈 Place order for QQQ: Enter the US ticker “QQQ” in the trading software and submit.

Method 2: Direct Overseas Brokerage Account

If you’re an active trader or want to minimize long-term costs, opening a direct overseas brokerage account is your best choice. This method bypasses domestic brokers and trades directly on the US market.

Why Open an Overseas Broker?

The core reasons for choosing an overseas broker are “cost” and “efficiency.” Trading directly with a US broker gives you advantages unavailable through complex orders:

• 💰 Lower trading costs: Many overseas brokers offer zero-commission US stock and ETF trades — saving significantly over time.
• 🚀 Faster execution: Orders go straight to the US market — ideal for traders needing quick reactions.
• 📈 Wider product range: Beyond stocks, some offer futures, options, and other derivatives for more flexible strategies.

Pros & Cons Analysis

Opening an overseas account is like upgrading from taking the bus to driving yourself — more freedom but more responsibility.

• 👍 Advantages
  • Extremely low (often zero) commissions: The biggest incentive — many mainstream brokers offer zero-fee US stock and ETF trading.
  • Direct asset ownership: Funds and shares are registered directly in your name.
  • Rich product selection: Far more instruments than complex orders.
• 👎 Disadvantages
  • International wire required: After opening, you must wire funds from Taiwan — extra fees and steps.
  • Mostly English interface: Account opening, trading, and support are primarily in English.
  • Funds held overseas: Some investors feel uneasy with money outside Taiwan.

Overseas Broker Fee Structure

Overseas brokers are highly competitive — many have entered the zero-commission era.

Account Opening & Wiring Process

Though it sounds complicated, most overseas brokers now offer fully online account opening — just prepare the required documents.

1. Online application:
   • Choose a broker, go to their website, and fill out the online form.
   • Prepare passport for ID and proof of address.
   • You’ll need to fill out the W-8BEN form — important for non-US residents to avoid US capital gains tax.
2. Wire funds:
   • After approval, the broker provides dedicated wiring instructions.
   • Go to your Taiwan bank to send an international wire transfer.

💡 Wiring Tip International wires typically take 1–5 business days. Fees include your Taiwan bank’s outgoing fee plus intermediary bank charges — total around US$15–40, depending on the bank.

Method 3: Taiwan-Listed Nasdaq ETF

Image Source: pexels

If you’re a small-capital investor or want to dollar-cost average easily, buying a Taiwan-listed ETF that tracks the Nasdaq is by far the most convenient and lowest-barrier option. No USD conversion or overseas account needed — use your regular Taiwan stock account to participate in US tech growth.

Taiwan-Listed Nasdaq ETFs

In Taiwan, you can directly buy an ETF tracking the Nasdaq-100. The most representative is Fubon’s “Fubon NASDAQ (00662)” — full name: Fubon NASDAQ-100 Securities Investment Trust Fund.

Pros & Cons Analysis

This method is extremely beginner-friendly, but understand both sides.

• 👍 Advantages
  • Trade in TWD: No currency conversion hassle or FX risk.
  • Extremely low entry: Buy fractional shares — perfect for small investors.
  • Most familiar process: Use your existing Taiwan brokerage app — full Chinese interface.
• 👎 Disadvantages
  • Internal expense ratio: The ETF charges management fees that slightly reduce returns over time.
  • Possible tracking error: Minor deviation between ETF performance and the actual index.

ETF Internal Expense Breakdown

Internal expenses are deducted directly from the ETF’s NAV — you don’t see the transaction, but it quietly affects total return.

Main internal expenses include:

• Management fee: Paid to the fund company (e.g., Fubon) for managing the ETF.
• Custodian fee: Paid to the custodian bank for holding assets.

For 00662, total management + custodian fees are about 0.34%. While higher than direct QQQ ownership, it’s still very reasonable considering no FX or wiring costs — especially for small investors.

How to Buy 00662?

Buying 00662 is as simple as buying TSMC or Hon Hai! Just enter the ticker “00662” in your brokerage app and place the order. You can buy during regular hours (including fractional shares) or set up automatic regular investments.

Whether investing a few thousand TWD at once or deducting monthly, the minimum unit is 1 share — giving you maximum flexibility.

Alternative Method: Contracts for Difference (CFDs)

Beyond the three mainstream methods, there’s a more advanced tool — Contracts for Difference (CFDs). This is very flexible but extremely high-risk — use only after fully understanding.

What Are CFDs?

Contracts for Difference (CFDs) are financial derivatives. Simply put, you don’t actually own the stocks in the Nasdaq Index — you enter a contract with a broker to trade based on the price movement of the index.

It works like this:

• If you expect the Nasdaq-100 to rise, you open a “long” position (buy).
• If you expect it to fall, you open a “short” position (sell).

At contract close, your profit or loss is the price difference between open and close. For example, you think the index will rise, buy CFD at 18,000, then sell at 18,100 — you profit from the 100-point difference. Conversely, if it falls, you lose.

CFD Advantages & High Risks

CFDs’ biggest appeal is flexibility and leverage — but that’s also the source of high risk.

• 📈 Advantages
  • Trade both directions: Profit whether the market goes up or down.
  • High leverage: Control large positions with small margin — potential returns are high.
  • Diverse products: Trade forex, commodities, etc., beyond indices.
• ⚠️ High Risks
  • Leverage magnifies losses: When the market moves against you, losses are magnified — possibly exceeding your initial capital.
  • Overnight funding charges: Holding CFD positions overnight incurs overnight funding (financing cost) — increasing holding costs.

Note: Overnight Funding This fee is calculated based on your position (long/short) and current interest rates. Long-term CFD holding continuously accrues this cost, eroding profits.

Who Are CFDs Suitable For?

Due to complexity and high risk, CFDs are absolutely not suitable for beginners.

They are better for experienced short-term active traders who:

• Have deep market knowledge and technical analysis skills.
• Strictly enforce stop-losses and manage risk.
• Have high risk tolerance and can withstand losses exceeding capital.

In summary, CFDs are powerful short-term trading tools but not suitable for stable long-term investing. If you lack knowledge and risk management, stay away.

After reviewing the three main methods, have you found the one that fits you best? Here’s a quick comparison table to help you decide.

Investment Method	Fees	Convenience	Capital Requirement	Best For
Method 1: Complex Orders	Higher	High	Medium	Beginners who hate overseas hassle
Method 2: Overseas Broker	Very low	Low	Higher	Active investors saving long-term costs
Method 3: Taiwan ETF	Medium	Very high	Very low	Small-capital regular investors

Ultimately, there’s no universally best method — only the one that fits you. Evaluate your habits and capital using the table above and take your first step into global tech giants confidently!

FAQ

Are dividends from US stocks taxed?

Yes. Dividends from US ETFs are subject to a 30% withholding tax regardless of method. This tax is usually visible in your broker’s backend — no extra reporting needed.

Which method has the lowest capital requirement?

Method 3: Taiwan-listed ETF.

You can buy fractional shares in TWD on the Taiwan market — as little as a few dozen TWD per share of 00662 — perfect for students or small-capital investors.

I want to dollar-cost average — which method?

For TWD regular investing, Taiwan-listed ETF (00662) is most convenient. If you have USD and want lowest fees, some overseas brokers offer recurring investment plans, but wiring is required first.

QQQ vs. 00662 — which should I choose?

• Lowest fees: Buy QQQ via overseas broker.
• Highest convenience: Buy 00662 on Taiwan market.

Both track the same index with very similar long-term performance. Choose based on whether you prioritize cost or convenience.