Investing in stocks is a tricky business. You have to know which stocks to buy and taking this decision alone requires important market information. Thanks to stock brokering services and availability of information you can easily start investing in your local stock market. If you are thinking of investing internationally, it will definitely come with more barriers. Your stock broker may most likely not offer foreign markets or will offer a few options at very high fees. Regardless of these restrictions there are ways that you can actually expand your investing horizon and you are about to find out how in this article, so lets get started with how to buy US stocks from abroad.
The most commonly used method is to get through a US brokerage firm. Creating an account with a US based broker will be easy as it can be done online by submitting documents which will be required to prove your identity. Visiting your chosen US brokerage firm’s website will allow you to view the pathway to open your own account with them and submit documents and information and start trading.
The process will require filling up of information and submission of scanned copies of applicable forms. The W-8BEN form is the most important for you as a non US investor to prove your foreign status. The next important form is Form 1001 which will allow you to avoid withholding taxes imposed inside the US.
Submission of required documents will take you to the next level of creating your account. Once you receive your verification mail, you can make a transfer to your new account in order to have the minimum balance to start investing. Once this is done, you will be able to start investing in US stocks.
Before You Buy US Stocks
Some of the biggest US brokers offer services to non-US customers and one foremost and very reputable firm is Firstrade.com, others are Zecco, Sogotrade and MBTrading.
There are many benefits in investing via a US based broker which are as follows.
• The brokerage fees will be much lesser than the fee you will need to pay to your local broker
• Forex risk will be lower
• You have the opportunity to use the best international brokering firms and experience their service
• Choosing a US based broker will open up doors to a whole new world of opportunities and give you a wide knowledge about the US stock market
Some cons of this option are as follows:
• You will be subjected to the investor protection rules of the US and not your local country. This will require you to know the legal system clearly in order to understand how your account will be affected at a time of crisis.
• Transferring money to your account may not be as easy as doing it locally. It will take time and money to make an international transfer.
As an investor you are naturally looking at new opportunities to increase your return on investment. Letting a few restrictions and barriers stop you from widening your investment horizon will be a shame and that is why you must take a leap of faith and try it out today.