How can you buy American shares?
It can be interesting to invest in American stocks. This is because these shares are issued by various large and renowned companies like Facebook, Apple, Alphabet (Google) and Microsoft. In this article we will show the best methods for buying U.S. shares!
How can you actively invest in U.S. shares?
Do you also want to actively invest in American stocks? Understandable! By actively trading in the price of American shares, you can respond to both rising and falling prices. To do this, you need an account with a CFD broker with which you can take a short position. With a short position, you can achieve a favourable investment result when the share price drops.
The broker PIus500 is a professional and reliable broker where you can trade in American CFD stocks. Plus500 does not only offers the possibility to invest in CFD US shares: you can also invest in stocks from different countries. Would you like to try trading in US CFD shares for free with a demo? Use the button below to directly open an account with PIus500:
72% of retail CFD accounts lose money.
Where can you buy American stocks?
Some people prefer to buy American stocks for the long term. When you buy U.S. stock, you can make a positive return through price gains and dividend payments. When you buy shares, you need to do more extensive research than when you invest in stocks for the short term.
A good party to buy American stocks is eToro. At eToro, you do not benefit from commissions when you buy stocks, which means that you can achieve a good result with this party even with a small amount of money. Press the button to directly open an account with eToro:
Your capital is at risk. Other fees apply. For more information, visit etoro.com/trading/fees.
Investing in an index
A good investment portfolio always consists of several investment products. An example of this is an Alphabet share, a bond and a tracker. To achieve immediate diversification in your portfolio, you can also choose to invest in an US index.
Several shares are linked to one index. By investing in an index, you immediately lower the sector-specific risk of your portfolio. One of the best-known American indices is the S&P 500 index, which tracks the 500 largest companies in America. Another well-known index is the Dow Jones. This index tracks 30 different American companies.
A good broker where you can invest in index funds is DEGIRO. With DEGIRO you pay no transaction fees on funds that are included in the core funds section. In addition, you benefit from user-friendly software and low transaction costs. Use the button to directly open an account with DEGIRO:
Buy your first share in 3 steps
Within three steps you can buy your first American share. Here we briefly discuss what you need to do to be able to invest in America.
Step 1: open an account with a broker
A broker is a company that makes it possible to buy and sell stocks. It is important to choose a good and reliable broker. Not all brokers are equally advantageous: with some brokers you pay high transaction costs. Use the button to immediately compare the best brokers with each other:
Step 2: select the share
Then you have to choose which American stock you want to buy. With technical- and fundamental analysis you can determine which stocks are undervalued. Also don't forget to examine whether the company performs well in relation to the competition. In this way you will ensure that you achieve the best results.
After you have decided to buy a share, you have to decide for what amount you want to buy the shares. It is important not to immediately put all your assets in one investment. Therefore, consider how the share fits within your strategy and determine on that basis how much money you want to allocate to the share.
Step 3: placing the order
To actually buy the stock, you need to place a stock order with your broker. You can choose between a market and a limit order. With a market order, you open the investment at the current price while with a limit order, you set a price at which you buy the stock. The first option is often a good choice for the long-term investor, while the last option may be better for the active trader or speculator.
The W-8BEN form
As a foreign investor, you cannot buy U.S. stocks without filling in this form. Fortunately, this is easy at online brokers, you can do this directly at the online platform. With this form, you indicate that you are not a resident of the United States, so you do not have to pay the 30% tax on dividends coming from the United States. Are you a resident in America? Then unfortunately you will have to pay this tax.
What are the largest U.S. companies?
The size of a company is often measured by looking at its market capitalization. In 2020, it is mainly the technology shares that will take up a large position:
What are the most popular & best U.S. stocks?
It is difficult to say what the best share is, as this is a rather subjective question. For example, the best share for one person can be too risky for another. It is therefore advisable to investigate carefully whether a company suits you. In this part of the article, we will discuss what some of the most popular U.S. stocks among investors.
The Apple company is more valuable than many small economies. With Steve Jobs, the company grew into an icon. With a stock market valuation of 2000 billion (!) an investment in the company can certainly be interesting.
Microsoft is another good example of an IT company that is a huge success. Almost everyone uses the software of this well-known company: Microsoft Word, Internet Explorer and Windows are all familiar products of Microsoft.
In America, Amazon controls more than 50% of the entire e-commerce world and the company is still growing in other regions. Moreover, they are also expanding into other branches: Amazon is also very successful in cloud computing.
Alphabet is mainly known by many people as Google. Googling has become a phenomenon and almost everyone gets information from this search engine on a daily basis. Google manages to make a lot of money with the ads that are displayed in the search engine.
General Electric is a large multinational trading electronics products worldwide. An investment in General Electric stocks can therefore certainly be interesting.
Tesla is a real hype: under Elon Musk electric driving became more and more fashionable. The production capacity has been increased and this offers many opportunities for investors.
A favourite of mine because of Warren Buffett. A beautiful man, who also turns out to be excellent at selecting and buying the right stocks. His fund did better than the S&P 500 which makes buying Berkshire Hathaway shares interesting.
Facebook is a real money machine: they know a lot about their users and this makes it interesting for advertisers to spend a lot of money. Buying Facebook stocks can therefore be profitable.
Walt Disney has been known for decades for the beautiful children's films they release and the big amusement parks. The new streaming service can bring in even more profits for this big American company.
First Majestic Silver
First Majestic Silver is a silver mining company mainly active in Mexico. This makes it an interesting investment for people who have confidence in a rising silver price.
With which ETFs or index funds can you invest in the U.S.?
Would you like to invest in a larger set of American stocks? Then index funds or ETFs are ideal. By buying these funds, you can invest directly in a collection of shares. The following funds are popular choices among investors:
- Vanguaard S&P 500
- istocks Core S&P 500
- istocks NASDAQ 100
- istocks S&P 500
Note the dollar
When investing in U.S. companies, it is important to pay attention to the dollar. If the dollar becomes more expensive, you will receive more of your own currency when you sell your shares. When the dollar becomes worth less, you will receive less of your currency back.
The value of the dollar therefore has a lot of influence on your final investment result when you invest by using another currency.
On top of that, it is important to take the competitive position of America into account. If the dollar becomes too expensive, it can make it harder for American companies to compete with international businesses. As you can see, the value of a currency can affect your investment in various ways.
Investing in a separate share
If you want to invest in American stocks, you have two options. You can invest in several stocks, but you can also put your assets in a single American share.
For example, do you want to benefit from the expected profits of Facebook or do you think that Microsoft's share will increase in value rapidly? Then invest in the share of Facebook or put your money in the share of Microsoft.
However, it is important to remember that this is a risky strategy. When the share in which you invest unexpectedly drops, you immediately lose a large part of your investment. By investing in various U.S. companies, you reduce the chance of a large loss.
Investing in American stocks as a foreigner
You don't have to go abroad at all to invest in American stocks. It doesn't matter if you want to buy a single share or invest in an index: you can do this from every country. There are several online brokers that offer the option to invest in American stocks.
Would you like to know at which brokers you can invest in American stocks? Then take a look at the best brokers to invest with:
Tip: practice with a demo account
Are you going to invest in CFD US stocks for the first time? Then we advise you not to invest with your money directly. By first practising with a fictitious capital, you can learn to make the right investment choices and respond well to developments in the (American) economy.
You can practice investing by opening a free demo. Have you practised enough? Then you can convert this demo account into a real investment account. With a real investment account, you can deposit money and get started for real. Do you want to know the best demo trading platforms? Take a look at our demo page and get started right away:
Keen an eye on the total costs
If you are going to invest in U.S. stocks with a broker, it is important to keep a close eye on all costs. There are three types of fees that can be calculated on your stock transaction.
The first costs that can be charged are commissions. Some brokers charge a fixed amount for each share transaction.
Another source of transaction fees are the spread costs: this is the difference between the bid and ask price. Some brokers without commissions can still be expensive when they use a wide spread. You then pay a higher price for each share.
A third source of costs is the currency costs. When you buy U.S. stock in a currency other than dollars, you often pay a fee to exchange your currency for dollars. Some brokers charge high fees for exchanging from one currency to another.
Applying a leverage
You can also choose to apply leverage to investments in U.S. shares. This allows you to take a larger position with a smaller amount. However, your losses will accumulate faster, and you may even lose the entire balance on your investment account. Let's explain this by using an example.
When you buy a share for $10 and the price rises by $1, you make a profit of $1. If you decide to apply a leverage of 1:10, you make a profit of $10 in the same situation. At the same time, this also means that you lose the full amount in your account when the price falls by only $1. Therefore, be careful when applying leverage on your US investments!
Some last tips when buying U.S. shares
It is of course important to keep a close eye on the situation in America when investing in American companies. The political, social and economic situation can have a great influence on your investments. For example, a presidential election can be important for the development of share prices. If one candidate wants to increase taxes substantially and the other candidate allows companies to pollute more, the last candidate will have a positive effect on share prices.
With any investment, it is important to manage your risks well. It is often advisable to step in staggered. Buying stocks periodically prevents you from investing all your money at the top and thus losing a lot. You can also spread your risks by investing in different sectors: don't exclusively buy shares of American Airlines, for example.
Evaluate your investments regularly and determine whether the stocks you have purchased still suit you. By doing so, you will achieve the best results with your investments.