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How to Buy International Shares
By
Will Ellis
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Last Updated on March 23, 2024
The stock market is operating globally, with opportunities everywhere. While there are plenty of opportunities in AU, some of the most money-making opportunities are found in the New York Stock Exchange (NYSE) and the Nasdaq.
Investing internationally can seem like a risk but, knowing how to do it and what to watch for, Aussies can take advantage of the opportunity without ever having to leave their sunny abode.
If you’re wondering how you can get started, stick around.
Table of Contents:
- Perks of Investing Internationally
- How Aussies Can Get in on the Action
- Best International Trading Platforms in Australia
- 1. eToro
- 2. CMC Markets
- 3. Saxo Markets
- 4. Superhero
- Risks of International Shares
- International Trading: Now’s your Time to Start
Perks of Investing Internationally
If you’re already well-versed in the world of investing, you probably already know the benefits of diversification. If not, just know this, diversification is a key way to increase performance and kick up your overall return.
Taking it across borders and overseas, investors could be looking at a very smooth-running portfolio, filled with companies from all of the best-performing markets.
While there are lots of markets across the globe, one of the most sought-after continues to be the United States. They are the world’s stock market, with eyes from all over, using them as a key indicator of what’s to come.
A few other perks to know when considering investing internationally include:
Higher performance
Though the US and other top stocks across the globe tend to get a solid reputation, they are not always the hottest performing. Buying internationally helps take advantage of what other stocks have going on.
Global growth
As the world gets more connected, economies are booming in unexpected places. There are several countries that are starting to see great benefits from expansion, trading, and other deals they’ve worked out with global leaders, pushing them into a position of power.
More choices
Investing in only one market limits choices. Investing internationally opens up a lot of doors when it comes to trading. Several international brokers offer Aussies the chance to get in on multiple markets, taking advantage of the best that each one has to offer for investors, both rookie and seasoned. Remember, diversification is key to creating a solid and well-performing portfolio that delivers when you need it most.
Fluctuations in currency
The value of a currency and the way that it interacts and exchanges with others is a make or break. For traders that benefit from changes in currency, they could reap the benefits of fluctuations and walk away with much more than what they came with while spending less overall. Currency fluctuations are a great way to make a return on changes that are always naturally occurring.
How Aussies Can Get in on the Action
Because of the obvious benefits that Aussies can score from getting in on the action in international stocks, it’s good to know how to get started.
These days, branching out and trading in international markets isn’t that uncommon, so there are ways Aussies can get involved. Three of the key ways to buy international shares include:
1. Using an online broker
Online brokers are nothing like they used to be. Today they are packed full of perks that are useful to investors and tools that can help any new investor. While there are a lot of brokers out there, you can narrow down your choices by looking for a few key characteristics, including:
- Brokerage fees – Some brokers charge commissions on trades that take away from the total amount you can earn. Check fees and try to go with the broker that has the lowest.
- Access to markets – Make sure that your broker has access to all sorts of markets, both in Aussie and out. The more they have, the better, allowing you to make your choices and diversify.
- Exchange rates – Some brokers without commission fees will load up on exchange rates. Be sure to keep your eyes open and don’t get surprised by high fees.
2. Investing in index funds or exchange-traded funds (ETFs)
Index funds track financial markets, which could be a simple way for Aussies to get in on buying foreign shares. They typically come with low risk and low cost, two things that could be perfect for first-time international investors.
Exchange-traded funds (ETFs) track indexes, sectors, or commodities, all of which are abundant in international markets. Because of the diversity of ETFs, investors could use them as a way to buy a group of international shares, all of which can be easily bought and sold on both local and international markets.
3. Investing in a managed fund
Managed funds are a great way to buy international shares. They are made up of a collection of investor money and consist of several entities including stocks, bonds, money markets, and more. Managed funds are typically managed by a professional or group of professionals that make buying and selling decisions based on the overall goal of the group.
Best International Trading Platforms in Australia
Choosing a trading platform is one of the most important parts of investing in any market. When buying international shares, it can be the make or break of a good experience.
Below, we’ll take a look at four of the best international trading platforms in Australia, helping you move further into your journey of buying international shares.
1. eToro
eToro is a fintech company that is available across the globe.
For Australians, eToro is regulated by the Australian Securities and Investment Commission (AASIC) and does not participate in the stock market.
All of their financial information is out in the open and accessible by the public, making them one of the safest and reliable international trading platforms around.
Users can trade cryptocurrencies, stock and ETFs. Opening an account and making trades is as simple as a few clicks once you get going.
2. CMC Markets
CMC Markets is a global forex broker that has been in the game since 1989.
During their time in the market, they’ve streamlined the process of investing, creating apps and simple interfaces to log in and start trading almost instantly.
CMC offers low forex fees, advanced tools, and research materials for in-depth market analysis, and even cuts out withdrawal fees.
3. Saxo Markets
Known as one of the best Forex brokers, Saxo Markets is Australia’s top-performing international trading platform.
They not only offer tons of trading options (mobile, web, desktop) but also lots of research tools that both new and seasoned investors can partake in.
They are a global provider and allow Australians to invest in markets across the globe to diversify their portfolio better than ever before.
4. Superhero
Superhero charges $0 for ETFs. Some international stocks (including a few listed on Wall Street) come with $0 commission fees and won’t cost any extra per trade.
Superhero doesn’t cost investors a ton to get started and allows entrance into some markets with as little as $100. For all trades that deal with changing currencies, investors will know the rate immediately and don’t have to wait until all is processed to understand all of the fees.
Risks of International Shares
While investing in international markets could be a way to diversify your portfolio, it doesn’t come without risks.
Before you start investing your money and start buying international shares, consider a few of these risks and how you would handle them.
Access to information
While the United States and a few other huge markets tend to be transparent when it comes to the stock market, not all countries are the same. There are many countries out there that prefer to keep information about their markets confidential and will restrict what investors can and cannot see.
Changes in market value
While some markets out there tend to be stable, others can experience major shifts from one day to the next. When investing in international shares, large fluctuations are the last thing you want, unless you’re trading for the day.
Political and social events
It’s sometimes hard to gauge the political climate when you’re not in the middle of it. While keeping up with current events in different countries and tuning into news can help, it’s still not the best way to get a feel for some markets. If things turn on a dime and the country is in political shambles, the market will crash and your money might no longer be accessible.
Operational differences
Some markets may operate differently than others. That’s important to note before trading, making sure that you’re doing things the right way from day one. This is not as big of a problem as it used to be thanks to online brokers, though it’s something that all investors should consider before investing in international markets.
International Trading: Now’s your Time to Start
Buying international shares has never been easier. Today, we live in a highly globalized world that’s full of trading opportunities. If you’re ready to take the plunge, check out some of Australia’s hottest international trading platforms and start exploring your options.
Then, you can watch as your portfolio gets a kick in the positive direction for the added diversity and opportunity for growth.
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