Are you wondering whether or not you can trade foreign stocks?
You no longer have to wonder. This blog post is going to give you the answer.
Can we really trade foreign stocks? This question has been asked on several occasions by stock traders just like you. Although they have received some answers, they may not have received the steps paths to take to do that.
So, how do we trade foreign stocks?
It’s a great question to ask yourself because when we talk about diversity it doesn’t only mean to buy shares from different stocks which are from one country. Buying stocks from other countries is possible as well, but there are some paths to take in order to achieve that.
It’s possible to trade foreign stocks on the American markets. You may not know how to do that, this blog post is going to walk you through the possible paths you can take to make that happen. By the time you’re finished reading this post you should be able to know how buy foreign stocks without any problem.
Why would you want to buy foreign stocks anyway?
According to the U.S Securities and Exchange Commissions, investors invest their money in foreign markets for two main reasons. These two reasons are to diversify and to grow their portfolio.
Although you may want to diversify and grow your portfolio by buying foreign stocks, you should also know that they’re also as risky as the non-foreign ones. For that matter you’ll still have to conduct your extensive research and you’ll also have to learn about that foreign market first.
Here are two routes you can take to buy foreign stocks
Route # 1- Contact your brokerage: You’ll need to know if your broker provides this service, there’s only a few of them that will be able to help you trade foreign stocks. If you don’t have a brokerage account already, it’s even better for you because you’ll be able to look for one that will be able to provide you with such a service.
Your broker will be able to buy shares for you directly from the foreign country in which you want your shares from. But this will be done according to your instructions and your instructions only. You’re still in charge of your trades although you may not be the person who’s putting them in.
In the case where your brokerage doesn’t have access to foreign stocks, you can still do so by choosing different paths.
Path # 2- You can buy from an international mutual fund: International mutual funds invest in stocks outside of the United States of America. They allow investors like us to buy shares through them from foreign countries.
They do have some advantages and disadvantage as well. You should weigh both the advantages and the disadvantages to see if it’s something you would want to go for.
- Professional management: They provide very professional management to help you with your trades and your portfolio. Per CNN Money, “Another advantage is that investing in mutual funds saves time. You’ve essentially hired a professional investor to monitor your portfolio’s holdings and do his or her best to buy and sell at appropriate times.”
- Diversification: Mutual funds provide instant diversification to its customers. You couldn’t ask for more than that because we’re all looking to diversified our portfolio.
- Cost: The cost may be a problem to investors. Mutual international funds are more costly than the regular U.S one, as a result profits from mutual funds may be affected somewhat.
- Connection with the personnel: Although you get to make the decisions in your portfolio, in mutual fund you may not be able to get in contact with the person who’s in charge of making some other decisions on your behalf when needed. This can be a huge problem to you.
Stock trading could be very confusing at times, one person’s telling you that you can do this, while another one is telling you this is impossible to get done.
When it comes to buying foreign stocks, you may get different answers from different people. However, it’s possible to invest your money in foreign countries while you’re living in the US or any other country.