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Buying shares of foreign companies is a good choice for people who want to go beyond the domestic stock market. Some Investors are increasingly interested in foreign instruments, so many brokers offer access to shares of major companies from different markets.
Buying shares of foreign companies – how to do it?
The most prominent companies in the world are American companies, so many people wonder how to buy shares of Apple or Amazon. Investors who want to invest in them often wonder where to buy shares of foreign companies, as it seems much more complicated than trading on the stock market.
When it comes to making trades, the process is not much different from making trades in domestic stocks. It’s just a matter of setting up a brokerage account, which allows you to invest in foreign markets.
If an investor wants to invest his capital on the trading floor, he must set up a brokerage account at one of the brokerage houses.
How to invest in foreign stocks using CFDs?
How to buy foreign stocks outside the stock market, and is it even possible? Yes, CFDs are used for this purpose.
A few investors interested in foreign stocks do not want to go outside the stock market due to having little capital. In such a situation, CFD trading can be an exciting alternative.
CFDs are leveraged instruments, meaning you do not need a high initial capital to trade on them. Using the so-called leverage, the trader can open positions only based on margin.
CFDs are derivative instruments whose quotations can be based on various financial instruments. These can be shares of individual companies, as well as entire baskets of shares, ETFs, or stock market indexes. In the case of CFDs, which are based on stocks and their quotations, it is possible to trade on them with a maximum leverage of 1:5.
In practice, this means that each trader opens positions at this level of leverage and must commit a deposit of 20% of the value of a given transaction. This type of solution makes it possible to maximize profits and is often used among those who engage in day trading.
Buying shares of foreign companies
If an investor is interested in buying U.S. companies or investing in another foreign exchange, they must open an investment account with a broker who, through an investment platform, directs buy and sell orders so that they go to the appropriate entities on a specific foreign exchange.
How to open a brokerage account abroad?
To buy shares of foreign companies, an investor must open an investment account with access to foreign markets. First, he must prepare all the necessary documents for this. Usually, a scan of an identity card will be needed, as well as confirmation of the address of residence.
Confirmation can be a current gas, electricity, or garbage collection bill. The service in question must be linked to a specific residential address, including the residential address and the name of the person who is setting up the account. A credit card or bank account statement showing the address and name of the investor may also be accepted.
The second step is to go to the broker’s website and fill out an application with the investor’s information. Foreign brokers/brokers very often require detailed information on assets, earnings, property owned, liabilities, etc.
Such questions are related to statutory restrictions in the United States, which require brokers to verify that the person to whom they open an account can afford to afford any losses on investments.
In order to buy stocks on foreign exchanges, one must also provide information on experience, as well as knowledge of trading specific financial instruments. The idea is to verify that people who open an investment account for trading options, for example, know what they are doing.
When it comes to a U.S. investment account, the client will also have to specify the type of account – either margin or cash. The cash account type means that if an investor deposits 100,000 USD into the account, this is the amount. Where he had at his disposal. On the other hand, a margin account means that the broker/broker will give the investor an additional loan, which will be the amount of his deposit. In this case, by depositing 100 thousand USD into the broker’s account, the broker will grant the investor the same amount to use, that is, he would have 200 thousand USD at his disposal. These funds are treated as a loan of 2.66 to 6%.
The last stage is the choice of the account’s settlement currency. Most investors choose the USD, as this is the currency in which most transactions are likely to be made. This is due to the fact that the largest number of financial instruments for investing in global assets are listed on U.S. exchanges.
Therefore, if you want to invest in shares of, for example, Brazilian or Chinese companies, you don’t need to have access to, for example, the Shanghai Stock Exchange, because quite a number of such shares are listed under ADRs on exchanges in the United States and settled in dollars.
At this point, it should also be mentioned that with some brokers, such as Degiro, you have to disable automatic currency conversion for transactions, which means that when selling shares that are listed in USD, the money from their sale will automatically be converted into PLN. This misses the point if, with the money from the sale of one stock in USD, the investor planned to buy other securities listed on the exchange also in USD.
In the case of automatic currency exchange, there will be a double conversion after each transaction, which will not be beneficial from the investor’s point of view. Such a problem does not exist with, for example, Lynx broker or Interactive Brokers, which always post the funds from a transaction in the currency in which the transaction took place.
On the other hand, money can be deposited directly into a bank account in zlotys and then manually exchanged for dollars on the platform, or you can use online exchange offices and deposit dollars directly to the broker. The last option is to order a foreign currency bank transfer from a gold account and then the currency conversion is left in the hands of the bank. However, this will be the worst option, as the bank is likely to charge a high commission on this, and the money will roll over at the highest exchange rates.
Where to buy shares of foreign companies?
Although it is possible to invest in companies outside of the stock market, it is best to think about where to buy foreign stocks directly, as this is the type of investment that most people are interested in. As mentioned earlier, the key, in this case, is to set up an investment account with the right broker.
Where to buy shares abroad? This type of opportunity is not available at all brokerages, which must be taken into account. However, more and more brokers are appearing on the market, which allows you to invest in foreign exchanges, so investing in shares of Coca-cola, Microsoft, Tesla, Apple, etc., is possible.
Where to buy shares on a foreign exchange? This can be done easily, using the services of Exante, Degiro, or XTB, for example. These are brokers that have one of the widest investment offers on the market. In addition, they provide investors with attractive trading conditions, so you can invest in foreign companies with low commissions.
It is worth mentioning that among the above-mentioned brokers, one comes from Poland, namely XTB. This broker is under the supervision of the Financial Supervision Commission, so investors have great confidence in it. In addition, on stocks and ETFs up to a monthly turnover of 100,000 euros you can trade with this broker with zero commission, it is the most popular broker and not only among Polish investors (also read: Where to buy ETFs).
How to buy shares of American companies? How to buy foreign stocks online
Shares of U.S. companies can easily be bought in two ways – either directly through a brokerage house or through CFDs, or contracts for difference, which are entered into with leverage.
How to buy Tesla shares?
Tesla is one of the companies of Elon Musk, who also owns SpaceX and The Boring Company. Tesla is primarily engaged in the production of electric cars. Currently, it is the most valuable car manufacturer in the world in terms of stock market capitalization.
How to buy Tesla shares? They are available on the New York Stock Exchange NASDAQ. However, you can’t buy them directly – you have to use an intermediary, i.e. a brokerage house or a broker. Give access to Tesla shares to mBank, for example.
To make money on Tesla, you can also opt for CFDs. These are contracts for difference, which are calculated on the price of the underlying instrument. By investing in a CFD, you can make money both when the price of an asset falls and when it rises. And in the case when the asset is a company’s shares, the investor can additionally count on dividend payments.
In addition, when buying CFDs, you can use leverage, thanks to which you can multiply the profits you make, but also the losses. For example, a leverage of 1:100 means that in the event of a 1% upward movement, the investor will earn 100%, being in a buying position.
How to buy Facebook shares?
The case is similar to Facebook shares. Where to buy Facebook shares? Access to foreign exchanges is provided by many brokerage houses.
Also read: How to buy shares on the stock market?
CFDs on Facebook shares can be bought from CFD and Forex brokers. These instruments are available, for example, at Admiral Markets and Plus500. To buy them, all you need to do after setting up an account is to access your investment account and open a new order account. Before the trader clicks the buy or sell window, the parameters of the transaction must still be set. This includes the size of the position and the size of the margin.
When trading CFDs, many brokers give you the option to set a stop-loss order. This allows you to sell the asset you own when it reaches a certain price, that is, at least to some extent minimize losses.
How to buy Apple shares?
Before an investor decides to buy Apple shares, he should familiarize himself with the company’s history. Apple is a classic example of a company that shows how hard it is to become a leader in its industry. In the late 1970s and early 1980s, Apple was the largest seller of personal computers.
After 20 years of operation, the company encountered serious problems, and the form got back on track in 1997, which was led again by Steve Jobs. At that time, the company introduced cutting-edge technologies, such as the iPhone cell phone. After 2005, share prices steadily gained in value. To invest in Apple, it is best to use CFDs.
How to buy Google shares?
Google was founded in the late 1990s and has become one of the best tools for finding information on the Internet. The company went public in 2004. In 2006, the company decided to invest and bought out YouTube. Despite various controversial moves, such as censoring search results in China, the company’s shares have consistently risen.
ETF – replicating the movements of U.S. stock market indices
This is a specific type of open-ended mutual fund, which is designed to track and replicate the stock market movements of the world’s largest indices. Wanting to invest in the U.S. stock market in Poland, the ETFSP500 is available, which can be purchased through most brokerages/brokers. Its big disadvantage, however, is that it does not replicate the movements of the SP500 index. This effectively means that if an investor plans to make money on the growth of the U.S. economy. If such growth occurs, the ETFSP500 may not provide a profit for the investor.
Trading U.S. futures and options
In the market, investors have to deal with various brokers/brokerage houses, which have in their offer to buy shares of foreign companies, also allowing investors to enter into derivative contracts on a given stock. These types of contracts are usually either futures or stock options. As in the case of buying shares of U.S. companies from a broker, the costs are relatively high, it is advisable to carefully study the commission tablets also in the situation of entering into futures contracts, because it may turn out that investing money at the level of several thousand, the transactions will not be profitable.
How to buy shares of German companies? Should i invest in international stocks
Many well-known brands are German companies. In addition to Adidas or Hugo Boss, it is also Bayer or Allianz. These companies are very popular and with the continued potential for growth, many people are thinking about investing in them. How to buy German stocks? These are shares of foreign companies, so it is more difficult to find them in the offer of brokerage houses, but it is possible.
How to buy stocks internationally on the DAX? Of course, you need to set up an investment account, through which the investor will have access to foreign markets. If the investor already has an account, the transaction itself will be basically no different from what it would be like to invest in the domestic stock market. To place an order to buy a stock, one needs to search for it, either by browsing all financial instruments or by typing the company’s name into the magnifying glass, and then clicking on it, while opening a new window.
To be able to give the order for execution, you just need to specify a few parameters – in particular, the type of order and its size. Then wait for the brokerage house or broker to execute the order, resulting in the appearance of shares in the investment account.
Buying shares of foreign companies – how to buy shares in Japan? How to invest internationally
There are 2 traditional methods of investment, and 3 considering derivatives:
- Direct investment in Japan by buying shares in companies,
- Indirect investment in Japan through equity funds.
Currently, many investors are wondering whether investing in Japan is a good long-term option. However, there are many arguments in favor of choosing to invest in Japanese stocks:
- They offer geographic diversification of the portfolio,
- They have the potential to increase in value,
- There is political stability in Japan,
- The fiscal stimulus included in the economic plan works in favor of stocks,
- Large equity and multinational companies are raising wages, which means a healthy economy,
- Due to the restructuring of the board of directors, it has been possible to increase the dividend payout rate,
- Japanese companies have good valuations.
Stocks of companies that should be of interest to the investor are:.
- Toyota Motor,
- Nissan Motor,
Japanese stock exchange in Tokyo
When an investor is interested in investing in a foreign stock exchange, he or she should first learn key information about the chosen country.
The opening hours of the Tokyo Stock Exchange are relatively exotic. According to local time, the stock exchange opens at 9:00 a.m. and closes at 3:00 p.m., which in the Polish time zone means that it opens at 2:00 a.m. and closes at 8:00 a.m. The stock exchange operates on weekdays, with the exception of Saturday, Sunday, and public holidays.
The Nikkei is the largest stock market index in all of Asia, which includes shares of 225 stocks of Japan’s largest companies. This index includes companies such as Nissan, Mazda, Mitsubishi, Sony, and Panasonic, among others. So it’s a huge field for investment, both in individual companies and the entire stock market index.
How to invest in Japanese market stocks?
There are several different ways to gain exposure to the Japanese market. The most popular are:
- Actual stocks – investing in Japanese stocks is possible after setting up a brokerage account, such as with Degiro, Exante, etc.,
- ETFs – these are low-cost, passive funds that are also gaining popularity in Poland. ETF units for the Japanese market can be bought at Exante or Dif Broker,
- CFDs on stocks or Nikeei index CFDs – such contracts for price differences, which are available at most brokerages,
- Mutual funds – these are actively managed funds and are particularly fond of the Japanese market.
An investor can buy shares of a specific company directly, or use ETFs and invest with one trade in a larger basket of stocks. An investor can use CFDs and trade both ways, either on declines or increases. Each option has its advantages and disadvantages.
ETFs have less risk because the investor’s capital is not invested in a single basket. On the other hand, buying stocks directly can result in a higher profit, if you are lucky, of course. The riskiest instrument is CFDs – in this case, you lose some or all of your capital or gain the most.
Is it worth investing in Japanese stocks?
In addition to where to buy Japanese stocks, it is also worth knowing what pros and cons this option have. It is important to note that the effect of the investment will also be affected by the price of the Japanese yen. As in any other country, the behavior of the market is also heavily influenced by decisions made by the central bank, in this case, the Bank of Japan.
These factors should also be taken into account in your own strategy, not just focusing on analyzing the performance of companies.
Regardless of how an investor decides to place his capital, the stock market in Japan, next to the U.S., is one of the best opportunities to increase one’s financial resources. In this case, the investor has to deal with a number of technology companies with high capitalization from a variety of sectors. In addition to Japan’s leading consumer electronics companies, e.g. Nikon, and Canon, as well as renowned automobile manufacturers such as Honda, Toyota, and Nissan.
How much does it cost to invest in foreign companies?
How much does it cost to buy foreign stocks? Currently, investing capital in foreign companies, ETFs or funds does not have to involve high fees to the broker, and certainly not higher than when investing in Polish stocks.
As for mBank’s offer, it includes the possibility of instant interest abroad in funds that have been released from the sale of shares of Polish companies. In this case, you don’t have to wait 2 days for the settlement of the transaction.
Comparison of brokers, or where is the best place to open an account?
Buying shares of foreign companies can be done through banks that offer investment services. However, in this case, commissions are higher than with foreign brokers. In this case, access to markets is also limited. Which brokers are worth paying attention to?
This is one of the cheapest brokers that operate on the market. You can maintain an account for free. As for commissions, they are PLN 1 for Polish stocks, EUR 0.50 for American stocks, and EUR 2 to 4 for European stocks. An account can be opened within a dozen minutes. The broker offers access to many global stock exchanges, including those in Canada, Japan, Singapore o Hong Kong.
The pluses of the broker include low commissions, no minimum deposit, and access to many markets.
The downsides, on the other hand, include a poor investment platform, a truncated number of financial instruments on the world markets, no access to options, and no margins.
This broker will be a suitable choice for beginners who are starting their adventure with the stock market or need access only to stocks and ETFs.
If an investor is wondering where to buy foreign stocks, he can consider the offer of this broker. This is a broker for intermediate traders who need a powerful trading platform to work with, which is equipped with a lot of data to help traders analyze financial instruments, as well as access to the widest range of instruments.
Maintaining an account is free of charge, but commissions on transactions are $5 in the U.S. market. The broker offers access to more than 100 exchanges from 26 countries.
The pluses of Lynx Broker’s services include a great trading platform and access to a wider range of markets. Setting up an account is free.
Disadvantages, on the other hand, are a relatively high initial capital of 10 thousand USD, the broker offers limited access to the Warsaw Stock Exchange, and commissions are relatively high.
This is a suitable broker for intermediate investors who intend to use options, as well as other derivatives, and are able to use the advantages of an advanced trading platform.
Investing in foreign stocks is also possible with Interactive Brokers. It offers one of the best trading platforms in the world. The broker has the widest range of more than a hundred different exchanges, as well as low commissions. Interactive Brokers offers access to all financial instruments, as well as the OTC market.
Pros include very low commissions, a great investment platform, as well as access to the widest range of markets and financial instruments.
On the other hand, the downsides include access to the Stock Exchange, and a minimum deposit of $10,000, with account maintenance costing $10 every month, as well as a lack of service in many countries.
It’s a suitable choice for advanced investors who trade with high capital and are able to use all the features of the offered investment platform.
Opening an account with XTB is possible entirely online. It is a Polish brokerage house, so it is highly regarded among domestic investors. Moreover, it has a very rich offer. It allows access to many foreign markets. It allows investing in shares of German companies, such as Adidas or Allianz, as well as in shares of British, American, French, or Swedish companies.
The advantages of the XTB broker include an intuitive trading system, low commissions, which can be as low as PLN 0, the ability to place orders out of session, open a demo account, and high security of capital.
This broker has an offer aimed at private investors, as well as small agencies and large investment companies. The account can be maintained for free, and support is available 24/7. The broker offers low commissions, as well as a huge selection of stocks, as well as other financial instruments, including ETFs.
Of course, the list of brokers you can use to invest in stocks on foreign markets does not end there. It is also worth mentioning Sogotrade, which offers low commissions, as well as access to derivatives, but only stock exchanges in the U.S., or Saxo Bank, which offers access to many foreign markets and offers a good investment platform.
Investing in the stock market – important rules
Investing in foreign stocks, as well as Polish stocks, requires acquiring certain knowledge and skills to reduce investment risks. The following tips allow you to minimize the risk and the chance to profit from your investment.
Diversify your investment portfolio
Diversification is simply putting money into different assets. If an investor is only interested in stocks, he should opt for different industries. This way, when stocks from one industry start to lose value, the investor will not lose all of his invested capital. Diversification is precisely about protecting at least part of the funds.
Acceptance of investment risk
Buying shares of foreign companies, but also domestic ones, as well as investing in other financial instruments, is associated with the risk of losing the invested capital. No investor me a guarantee that he will be able to generate a profit. The best approach possible is to accept the existing risks and implement rules to reduce them. Thanks to such mental preparation, the moment an investor loses capital, his mental state will not be so negatively affected.
Basic information about investing
Before starting to invest, every person should familiarize himself with the subject. It is worth acquiring at least basic knowledge and learning about investment terminology. If an investor is interested in buying shares of foreign companies, he should learn about these financial instruments and know what they entail. Investing without prior preparation is not a good idea. Although an investment account can be opened by anyone and it is an activity that is freely available to the public, it is advisable to prepare for it to some extent.
Investing according to a plan
A plan is an investment strategy. Before making your first transactions, it is essential to take a plan according to which investments will be made. Depending on his preferences, an investor can choose a strategy from those already available on the market, or create his own individual plan of action. In the second case, he can rely on existing strategies and take from them those elements that are suitable for him, and then create his own investment strategy.
Investing according to your knowledge
Investing is best started with small steps. Do not throw yourself into the deep end. You should first invest in those instruments or securities about which you have certain knowledge. Only as you gain knowledge should you become interested in other financial instruments and start investing your capital in them. It is still worth remembering to expand your knowledge.
Investing in foreign or domestic stocks, as well as in other financial instruments, requires constant learning. If an investor is serious about this occupation, he or she should draw knowledge from various sources, including webinars, ebooks, audiobooks, online articles, but also training courses. Courses in investing are available both online and in classroom form. Depending on your needs, you can take either free or paid training courses. When it comes to investing, it’s a good idea to stay up to date with all the trends in the stock market world (also read: Online stock market).
Theoretical knowledge is very important, but it is no substitute for practice. You can gain practical skills by using a demo account provided by the broker. The demo account allows you to get acquainted with the functioning of the stock market and the rules that govern it. The investor can do this without incurring investment risk, that is, without the risk of losing his funds.
A demo account also allows you to check your investment strategy. The investor can verify whether the plan he has chosen is effective and brings the expected results.
Buying shares of foreign companies is not complicated and looks similar to buying shares of companies on the domestic stock market. The investor has the choice of using a broker or a brokerage house, such as a bank of his choice, which offers investment services. Beforehand, it is advisable to analyze several different offers of brokerage houses/brokers to choose the one that offers the most favorable terms.
What is the best way to buy a foreign stock?
The best way to buy a foreign stock depends on several factors, such as the availability of the stock on your local exchange, the fees charged by brokers, and the foreign exchange rate. One option is to use a broker that offers access to international markets, allowing you to buy and sell foreign stocks directly. Another option is to use an exchange-traded fund (ETF) that tracks a foreign stock index, providing exposure to a basket of foreign stocks. It’s important to research the fees and charges associated with each option and consider the risks involved, including currency fluctuations and geopolitical events that could impact the stock’s value.
Can a US citizen invest in foreign stocks?
Yes, a US citizen can invest in foreign stocks. There are several ways to do this, including using a broker that offers access to international markets, purchasing American Depository Receipts (ADRs) of foreign companies that trade on US exchanges, or investing in exchange-traded funds (ETFs) that track foreign stock indices. However, it’s important to keep in mind that investing in foreign stocks comes with additional risks such as currency fluctuations and geopolitical events that can impact the stock’s value. It’s important to do your research and consider these factors before making any investment decisions. Additionally, US citizens must comply with US tax laws and regulations when investing in foreign stocks.
What is it called when you invest in foreign stocks?
When you invest in foreign stocks, it’s generally referred to as international investing or global investing. It means that you are buying shares of companies that are located outside of your home country. Depending on the investment vehicle you use, such as a direct purchase of foreign stocks, American Depository Receipts (ADRs) or exchange-traded funds (ETFs), the specific term used may differ. However, the overarching concept of investing in companies based outside of your home country is referred to as international or global investing.