How to buy US Stocks and Shares in Australia

For some investors, trading on the US stock market can seem intimidating. However, it’s easier than ever before and with some knowledge behind you and a few tips along the way, you may find that investing in stateside is not nearly as daunting as you once thought.

Investing overseas can provide a wide range of benefits such as higher returns and portfolio diversification. If you’re looking to get started in investing directly in the US, we share what you need to know. Alternatively, if you’re looking to invest in international ETFs, this guide is a good place to start.

Buy US stocks in 5 steps

Here are some tips that you can consider when trading in the US market. But, bear in mind that you should do your own research and make investment decisions based on your own personal circumstances.
1.) Start small – Always make sure you manage your risks.
2.) Understand USD – When investing in the US, you are trading in US  dollars. Understand how that works for you.
3.) Know your risk – Determine your own risk factors and where possible it may be good to set a limit order for buying or selling shares.
4.) Research before deciding how and where to buy your shares – Although investing is generally universal, there are nuances that you should try to understand. For example, times that the market is open, trading rules, tax implications. Reading and speaking to others is a great way to get up to speed.
5.) Seek advice – If you are unsure, always seek the advice of your professional advisers

Why invest in US Stocks in Australia?

Did you know there is more money moving through the US than any other market in the world? On any given day, the amount of money traded in Apple stock is more than the entire Aussie market.

By volume and market size, the US markets remains the world’s largest market, making up close to 40% of the stock market capitalisation of global exchanges. It’s also where the largest and most dynamic companies are listed – think of brands such as Apple, Nike, Disney, Starbucks, Amazon and Google. It’s likely that the next Apple and Microsoft are also listed there, with new breeds of tech firms such as Uber, Beyond Meat and Alibaba are also recently listing in the US.

→ Related: What are the best US stocks?

Investing overseas, especially in one of the world’s largest markets, provides a higher level of diversification compared to if you just invested on Australian soil. This means that if the Australian economy was slow and underperforming, you could see positive performance in the same time period within the US market.

How can I buy US Stocks in Australia?

Getting involved in the US markets requires a broker that can place orders on your behalf. It’s no different to how you would invest locally. However, historically, for most Australians (and generally anyone outside the US) it’s been very difficult to access the US stock market – there was lots of paper forms, high costs and lots of complications.

However, times have changed and with the advent of technology and niche platforms focusing on the world’s biggest market, it’s now simpler and more affordable than ever. There is a large list of online share trading platforms that offer US share trading. Check out the table above to see some of the providers who allow you to invest in the US.

→ Related: Should I invest in the share market with only $500

How much does it cost to buy US shares?

The cost can really vary depending on which exchange you choose to go with. In the table above, there are fees listed. Some exchanges offer no trading fees but may capture the fees in other methods. Others may offer trading fees as low as $10. It pays to do your research as each platform operates in a different way. You’ll likely be charged a foreign exchange (FX) fee, and some platforms charge an inactivity fee for users who aren’t trading regularly.

Who trades in US stock markets?

The US is home to finance moguls from all over the world. One of the most well-known investors is Warren Buffett with a net worth of US$82 billion. Buffett is an avid investor and believer in the US markets.

However, it’s not only the big end of town that invest in the US market. According to a recent Gallup Poll, 52% of all American adults have money invested in the US stock market. Due to the size of the opportunity and the introduction of new ways to access the market, it’s becoming easier for those outside the US to get involved as well.

The pros

Investing in the US markets allows you to find a much larger range of investment opportunities compared to what you would find in only Australia. Adding shares from the US to your portfolio can do wonders for diversification, but it’s important to do your research and understand the company you’re investing in. The cost to invest is much more affordable than what it has historically been and the rise of online share trading platforms means that investing overseas has become largely accessible.

The cons

If you’re investing overseas, the fees can add up. Brokerage fees can vary between platforms and most will have a different fee for investing abroad compared to locally. Research is imperative to investing overseas as you may not have the level of understanding of companies overseas as you do for companies at home (i.e. Walmart VS Woolworths). Another factor to consider when investing internationally is the exchange rates. The value of the AUD compared to USD can vary, which can impact the value of your investment when you are buying and selling.