Are you interested in trading stocks? These days you can buy and sell stocks from all over the world including the biggest and arguably most important market of all The United States. In this article we will show you how to invest/ buy in US Stocks.
The U.S stock market also offers a greater diversity of companies than any others country. The New York Stock Exchange (NYSE) and The Nasdaq are the two largest stock exchanges in the world.
Step Number One (1)
Step number one find a stock broker to buy and sell US shares you will need to sign up with a stock broker that gives you access to the US market. Now you could go with a traditional full service broker like morgan stanley but that’s very expensive if you’re just starting out and you don’t have a spare 250.000 cash. The much cheaper option is to use an online share trading platform.
There are plenty of trading platforms out there but not all of them offer US stocksand some of them do but they charge exorbitant prices.
Step Number Two (2)
When you’re picking your online broker one of the most important costs to look at is the brokerage fee also called the commission fee this is the fee charge by your broker every time you buy or sell stocks brokerage fees for U.S stocks are very different depending on the platform you choose ranging from as high as 60 a trade to zero dollars a trade. That’s right some brokers charge nothing at all to make trades on a side note we don’t yet have a zero.
Step Number Three (3)
So far it’s you at stocks only in any case just because you don’t pay a brokerage fee for U.S stocks it doesn’t mean it’s free nothing is free in investing so read the fine print the other big fee to be aware of is the currency conversion fee this is the fee charge by your broker to convert money from your currency to usd because you can’t buy U.S stocks in your currency so your broker will typically charge a fee to convert your money whenever you make a trade or when you top up your account.
Step Number Four (4)
Also check how many country markets the broker has access to how easy the platform is to use is it fast and simple and user-friendly and can you access it on your desktop or is it only on your phone.
Step Number Five (5)
Open and fund your account once you’ve worked out which broker you want to go with it’s time to sign up you need to be over
18 plus you will need your id and tax file number this application process can take as little as a few minutes to a few weeks depending on the broker after you’ve signed up you will need to top up your account this is usually a bank transfer but it could also be a credit card transfer paypal or debit card and the broker will usually open up a bank account for you under your name so it pays to be aware of that picking your stocks picking your stocks is the fun part but it’s also the most challenging.
Step Number Six (6)
There are a few tips that can make it easier. First up pick a company you know. Do you use its products are you a fan if so you will have a better idea of if it’s doing well or if it’s failing customers follow broker ratings you can follow the ratings and price targets set by investment firms or analysts pick a company you believe in do you think it’s making all the right moves.
Step Number Seven (7)
Is it ethical and even if you’re not into ethical investing trends show that a lot of other people are debt levels make sure the company debt is under control if it’s not it’s going to have trouble growing and worst case scenario it may even go under expansion plans is the company moving into new markets does it pay dividends. Dividends are a percentage of company profits which some choose to pay out to its shareholders dividends don’t tend to be as high on average in the US as what you’d find in
your Country but it’s still a pretty important consideration finally valuation is the stock overpriced or underpriced.
Step Number Eight (8)
Order the stocks stocks are priced anywhere from less than a cent to thousands of dollars. A higher price stock doesn’t necessarily mean that it has higher value for example around mid-august 2020 tesla shares had a price of around 1500 at the end of August they split their stock by five this is called a stock split which means that Tesla shares will be priced at around 300 each this doesn’t change the value of your Tesla shareholdings just means you can buy more stock for a lower price.
U.S shares in fact depending on the broker you choose you could invest as little as a few cents into a U.S stock if that’s something you’re interested in doing and some U.S trading apps like Etoro stake or interactive brokers allow you to trade in fractions this is called fractional investing. This allows you to buy part of a share rather than whole shares so instead of
paying fifteen hundred dollars for one Google stock you could invest in one tenth of a share for fifteen dollars. This feature is only available to U.S stocks.
So say i’m wanting to invest one thousand dollars on Tesla, my trade will go through it whatever the stock is priced at at the time the trade goes through and then you have your conditional orders which is where you can select a specific buy price or a buy price range for example say i want to invest in Tesla but i think its share price is going to fall in the near future i can set a limit order to buy once Tesla stock falls to a lower price and then after you enter the number of stocks you would like to buy or the amount you would like to invest preview and confirm your purchase and you can do the same process and reverse to sell
Step Number Nine (9)
If you want to invest in the US market but aren’t too keen on stock picking you can also invest in a US-themed exchange-traded fund an etf is an investment fund that holds hundreds or thousands of company shares so instead of buying stocks in one company you can invest in a whole portfolio of stocks the asx has dozens of etfs that track U.S companies including nasdaq etfs ethical U.S stock etfs and U.S property etfs.
Your other option is to invest using a robo-advisor or micro-investment app such as raise or spaceship robo-advisors invest your money into portfolios of etfs or portfolios of stocks and many of them hold US stocks next steps you will want to keep an eye on the performance of your stocks unless you’re an active trader you should try not to check on your stocks too much say once a week or once a month at most otherwise you will get sucked into the drama of the market and you will probably start making some pretty poor decisions you will need to pay tax on profits including dividends the U.S side of this is usually dealt with by your broker so check with them but you should only be taxed once usually on your country.
Step Number Ten (10)
You should get a financial summary from your broker with your taxable income. You can access different investment opportunities such as the fang stocks with fractional investing and zero broker fees it can also be more affordable than investing in your country shares especially if you’re just starting out
by investing in overseas markets you are diversifying your portfolio and you get to invest in more companies you know and own.
But in the other hand depending on your broker brokerage fees can be higher trading in U.S stocks means you are vulnerable to your currency to USD currency fluctuations because you’re dealing with U.S markets most of the trading happens after you go to bed so it can be tricky to keep an eye on prices and events happening overnight you will have to pay a fee to exchange your currency into US dollars and this process can add time to your trades.
I think that’s all. I hope you have a nice day.
Inspired by https://www.youtube.com/watch?v=mERKPmCOSMM