The stock market remains overvalued. Hence, many investors would be interested in searching for ways on how to buy US shares in Australia. However, trading international shares faces intense market volatility. It would be wise to browse binary options to support your decisions rather than buying shares right away to secure your investments’ long-term performance.
A binary option is a financial tool that enables users to wisely monitor the rise and decline in companies’ prices of trading stocks like Google and Amazon. This function is essential in the trade industry. It can help users better understand the stock exchange and even international investment.
Like the New York stock market, investing in American companies can bring many benefits from the diversification of your portfolio to exposure to different types of services and products that can yield high amounts of income. Jumpstart your trading journey and explore various advantageous markets with this guide in international share trading from Australia.
How to Buy Shares from Australia
Here is a quick run-through of the necessary steps in purchasing US stocks for Australian traders and investors. These will be comprehensively explained throughout this guide:
- Canvass brokers that provide access to US stocks
- Choose a trading platform that suits your needs and goals best.
- Start up your account and fulfill all requirements.
- Transfer money to your account
- Browse and pick the best companies to buy stocks from
Considerations in Choosing Brokerage Firms
Before even earning from investments, you need to shell out capital. Thus, it is pivotal to put significant thought when deciding with which broker you will work. Below are some of the most crucial qualifications you must tick when browsing for brokers, both in physical banks and in online exchanges.
The four major banks in Australia, namely Commonwealth Bank, National Australia Bank (NAB), Westpac, and ANZ, support local and international trading. Another is the ASX or Australian Securities Exchange, which is the country’s primary exchange. They are considered the safest and most secured brokers for investors to transact in.
While in the US, the NYSE or New York Stock Exchange is hailed as the world’s largest equities-based exchange.
Now that online brokerage firms have also been getting popular, discerning which of these companies are legitimate is critical.
Somehow related to the earlier criteria, you must make sure that you are putting your funds on a share through a secured platform. Money matters indeed beg for security because otherwise, this may put your financial stability at risk, and you may lose your investment.
It would help if you had a broker whose sites and platforms are efficiently manageable and accessible. Check if the candidates’ online trading platforms can process data and request traffic and can effectively fulfill your needs as a user, especially when dealing with international entities.
Trading platforms that support various international markets and diverse exchanges (i.e., the york stock exchange) are preferable since you can make multiple investments via a single platform.
Go for brokers that provide suitable trading options that help traders in the phase of economic instability and market fluctuations. An example of these is limit orders.
Other platforms are also flexible in terms of accessibility. You can use some of these platforms conveniently, even through your phone.
Service Costs and Expenses
When comparing firms, you must be critical of their corresponding fees. Note that companies’ additional rates whenever you trade US stocks are still different from the broker fees themselves.
Some cost more than the others, but both offer similar services and quality. Hence, the practical move would be to survey popular brokers and choose those that give you excellent assistance at a fair price.
Additionally, see if users need to pay monthly fees to maintain and keep the account active. Others also charge subscriptions to enjoy additional features that are unavailable for regular users.
Rate of Conversion
Part of the expenses is the exchange rates in different firms, including the payments when converting AUD to USD. There is no fixed rate as this varies in every platform, mainly to balance lower broker fees. It would be best if you took note of this because conversion is a recurring transaction.
Market Analysis and Statistics
Platforms display market data through different charts. It is highly encouraged to pick ones that skillfully and creatively present market statistics to help users understand and analyze trends and make informed financial decisions.
Other Educational Resources
Stock trading is a very complex activity, so you may want to refer to blogs and other research materials provided by brokerage sites. These can further your understanding and awareness of the current market conditions and trends and positively influence your decision-making.
Other state-sponsored entities such as the Australian Securities and Investments Commission also disseminate smart and even ethical trading information.
Online transactions are less regulated than physical ones. There is always a possibility that you might encounter troubles without any insurance to back you up. This is where the importance of responsive customer service comes to play. Your broker must have a desk available 24/7 to assist you.
Some of the Most Popular US Stockbrokers for Australian Traders
International stock trading used to be a struggle for most budding investors in Australia. It is due to the lack of share trading platforms that offer global exchange services. Those firms do come at tremendous costs that eventually discourage many beginning investors.
However, that is not the case anymore. From the advancement of online share trading platforms and calibration of market activities, many brokerage firms have entered the Australian market and are also catering to foreign investments.
CommSec – Best for Reputable and Safe Transactions
CommSec ranks as one of the safest and most credible banking institutions that are among the first to make share trading international. It can cater to as many as 25 exchanges across the globe.
Westpac – Best Educational Resources
This firm offers quality brokerage services and provides insightful educational resources that are extremely helpful for investors when analyzing trends and weighing investment decisions. It covers about 30 exchanges internationally.
Firms that Offer Zero Brokerage Fees
These platforms have made it possible for more Aussies to engage in international trading from their affordability and stellar customer support.
eToro – Best for Social Copy Trading
This platform allows beginner traders to follow the footsteps of veteran investors by replicating investments. You may also use this platform for cryptocurrency trading.
IG – Best for Varied Trading Tools
IG became renowned for its excellent and trustworthy service. It also integrates various trading tools and instruments. It displays corresponding video tutorials for its users to gain valuable knowledge regarding investing.
CMC Markets – Best for Fair Pricing
CMC renders top-of-the-line services at extremely fair rates and prices, enabling it to be one of the top choices of international traders and investors. It offers many trading tools as well as educational resources.
Getting Started with US Share Trading
By now, you know what to look for in brokerage firms and have an idea about the most renowned brokers. Let us then elaborate on how investors can buy and trade US stocks from Australia.
Setting Up Your Account
After selecting a trusted broker, time to create your account on their platform. The steps in opening a share trading account are different across firms. Do not forget to read their respective instructions and pay attention to their terms and conditions upon establishing your account.
Choose a username and secure your account with a strong password. It is recommendable that you use random symbols to lessen your account’s vulnerability to hacking. Pair this up with a Password Manager application so that you do not forget your credentials. You may opt to change your password regularly to ensure its security further.
Some platforms integrate two-factor authentication (2FA) functions. Other devices that may be suspicious will not gain access to your account quickly.
Accomplish Verification Requirements
Once you have created your account, platforms will ask for necessary documents intended for verification. Submit all that is needed and wait for confirmation. Go for firms that do not compromise your time and convenience for the sake of validation.
Fund Your Account
Allocate and transfer money into your account to start investing. If this would be your first time, the general rule of thumb would be to allot the minimum amount of money you will be initially investing.
Some of the typical methods are through bank transfer, credit cards, and Paypal.
Selecting Your Stocks
Picking the company from which you will purchase stocks can be quite tricky and also interesting. Put into context, the spike in Tesla’s shares within a short period is somehow spontaneous and even shocking.
Although certainty can never be assured when it comes to stock values, stock prices can be predicted through market trends, analyses, and close monitoring of company performance. The Nasdaq, formally known as the National Association of Securities Dealers Automated Quotations, contains all companies that trade with Nasdaq.
Investors can use these resources to determine whether a company is worth investing in. Magazines and other expert-guided sites are already releasing lists of competent companies that can multiply the money you put into their shares.
Exchange-traded funds (ETFs) are a type of investment funds commonly traded on stock exchanges.
Here are other points you may consider when choosing your stocks:
The Company You Know, or at Least Are Familiar with
It is advisable that you pick a company from which you already know. With this, you are already familiar with the company’s system and its standards to ensure profitability and make your investment worthwhile.
Adhere to Broker Ratings
Some brokers implement rating systems of different stocks so you can speculate which ones are performing well or failing miserably. Although ratings are very impartial and even transitory, they can be a useful starting guide when surveying shares.
The Company You Believe in
More than money, it pays to invest in companies that also share the same goals and values that you do.
In the turbulent nature of business industries, income stability is a complex topic. But if you know how a company behaves in the face of a crisis, you have confidence that they can always bounce back and return their losses.
Check the debt levels and loans of the company, making sure that their liabilities are under control. As much as possible, companies in peril of bankruptcy are already red flags. Otherwise, the company will have great difficulty in growing and developing.
Plans and Developments
Invest in visionary companies that have already formulated or at least have ideas for their expansion plans. Such plans include considerations of whether the company will converge with new markets and strategies for capitalization.
Dividends are the percentage of payments transferred by companies to shareholders. Local companies generally give higher dividends, but this is another relatively valuable element in trading.
See to it if the stock is overpriced or underpriced. There are many literature sources online that can help you analyze and evaluate stock values.
When Your Investment Is Already Ongoing
The bullets explain some of the other procedures you will undergo once your investment is already up and running.
Keep an Eye on the Progress of Your Investment
Word of caution, though, try not to check on your investment too much as this can be very time-consuming and even unsettling. Checking regularly (at least once a week) is already good enough.
Paying on Tax Profits and Dividends
Most of these complex matters will already be dealt with by your broker. Contact the point person of your broker and check with them from time to time. Review the financial summary provided by your broker to keep your balances in check.
Benefits of Investing in American Shares
The United States houses many highly successful companies with more diverse sets of products and services than Australia. It is easier to find businesses that fit the model for consistent growth. A strong management team yields higher returns in the capital.
These are more reasons why investing in US markets may be a good option for you:
Vast Investment Opportunities
Renowned Australian companies are often confined within mining industries. But when you choose to trade internationally, you are exposed to a more significant number of companies and broader investment options. These are complemented with high volumes of market liquidity and capitalization.
More and more brokers with international trading options have been getting more and more affordable with fractional investing and zero broker fees features. Some experts say that it may be cheaper than investing in Australian shares, especially for beginners.
By investing in overseas markets, you get to diversify your portfolio by being more aware of other existing product lines and services.
Drawbacks You Must Watch Out for
While these benefits are undoubtedly promising, there are potential holes that you must watch out for if you want your investment to be a success story.
Potentially Higher Brokerage Fees
To offset the zero fees in transactions, other firms might set brokerage expenses at higher rates. It would help if you exhausted all options before committing to one.
A common pitfall for international share trading is the shifts in the currency rates of AUD to USD. International trades make you vulnerable to these changes, and some modifications may negatively impact your investment.
As stated above, always read the terms and conditions carefully, as additional fees are written there. Other hidden fees may include inactivity compensations and exchange costs. Note that these fees may hurt your wallet. If you could read through the whole guide until this part, you have gained additional insights in buying and trading US stocks from Australia. Always bear these factors in mind, and make wise investment decisions every day.