There are numerous ways for a foreigner to invest in American shares and trade them without any fuss
The US stock market is the biggest globally, accounting for over a half of the world’s stocks.
According to the latest research data, the US equity markets represent 41.6% of the $117 trillion global equity market cap, or $49 trillion. Despite possible volatility, a significant number of people thinks stocks and bonds are the safest and most profitable investment types. In the US itself, 56% of the adult population invested in the stock market in 2021.
Since there is no citizenship requirement for owning stocks in American companies, many foreigners are attracted to the US market as well. Over the last two decades, the biggest driver of foreign investor equity demand has been a weakening US dollar, thus, foreign investors bought more US stocks than corporations in 2020, when the USD was hit by the pandemic.
Here are the most convenient ways you can trade US stocks as a non-resident foreigner.
Trading apps and brokerage services
With this app from a fully licenced and regulated Saxo bank, traders can buy and sell stocks, indices and futures directly from live, integrated charts, taking advantage of technical indicators, drawing tools, risk-management features, fundamental analysis tools, automated Trade Signals, an enhanced trade ticket solution, and more. The platform provides access to 19,000+ stocks on 36 exchanges worldwide, 3,000+ low-commission exchange traded products, 1,200+ listed options on 23 exchanges globally, contracts for difference on 9,000+ instruments, 5,000+ government and corporate bonds, and other financial instruments. You can fund and deposit your Saxo account with 18 different currencies.
One of Canada’s fastest growing online brokerages has a dedicated QuestMobile app for trading stocks and ETFs. Contracts for differences (CFDs) and forex are also available to trade, though they require the use of a separate platform. In addition, Questrade offers guaranteed investment certificates (GICs), options, bonds, mutual funds, international equities, access to initial public offerings (IPOs), and precious metal purchases. However, opening an account at Questrade is unfortunately available only for the legal residents of Canada.
TradeStation is suitable for both active and casual traders, having zero trade commissions, advanced tools, and a powerful platform. Professional traders can use a subscription plan to get a full suite of trading and analytical tools. The platform is widely used by institutional investors, such as hedge funds, family offices and investment bank proprietary trading desks. TradeStation can also be customised with hundreds of apps, and even allows people to code their own trading programs.
Trading accounts are available to UK citizens on all Revolut plans. With the familiar app, you can invest in 800+ global companies’ shares, including trading fractional shares from as little as $1. Customers get real-time notifications about the desired prices, corporate performance and market news. The benefit of the app is that it combines basic financial services with investment activities.
Passfolio empowers investors in over 170 countries to grow their capital by trading US stocks, ETFs and REITs. Traders can use their local currency and local deposit methods. The service accepts deposits via wire transfers, TED, RemessaOnline or even cryptocurrencies through Passfolio Financial. Zero commission-fees are another bonus.
Indian citizens can trade US stocks, ETFs and mutual funds with INDmoney. The option to trade Indian stocks is expected soon too. Besides, this super-app includes financial planning and goal-setting tools, analysis of card spends, with payment reminders, free credit score check, and US stock rewards upon spending on selected brands. In the next quarter, the company is looking to launch a credit-card-based product for users, linked with its neo-bank.
Another Indian service allows users to activate a free international trading account to buy and sell US stocks and ETFs. There are no account maintenance or brokerage fees. Unlike full-service brokers, Groww does not offer any trading tips, recommendations, and research services. However, it provides free eBooks, informative and educative blogs, and resources to help beginner investors learn the basics of stock market trading.
Zacks Trade is an online broker dedicated to traders and investors all over the world. Zacks is available in 218 countries and territories whereas its customers can trade on more than 90 international exchanges. The broker charges a commission on stock and ETF trades, but it doesn’t charge placing phone trades with the help of a human assistant. There are three platforms to trade on: Zacks Trade Pro with extensive tools and customisable format for active traders; Zacks Trader – a scaled-down, web-based version; and Client Portal for simple trades and access to account documents and balances.
Interactive Brokers is one of the best brokers for professional and sophisticated, active traders, boasting a powerful suite of tools. Customers from over 220 countries can trade stocks, options, futures, forex, bonds, and funds on 135 markets from a single integrated account. Its “SmartRouting” software provides clients with the best price execution available at this particular moment. Besides, Impact Dashboard helps you evaluate assets from a socially responsible investing (SRI) viewpoint. The company launched a robo-advisory platform for investors who want to surpass market returns and reach certain financial goals.
TD Ameritrade is good for beginner investors. The brokerage offers unparalleled education materials. It also excels at offering low-cost and low-minimum mutual funds. Moreover, the broker offers advanced products like futures and forex trading in addition to its professional-level trading thinkorswim desktop platform. Research, analysis, commentary and news are available from 15 providers, including Argus, CFRA, Reuters, Vickers and Morningstar.
Charles Schwab International
Schwab offers access to fractional shares of S&P 500 stocks, a large selection of funds with low expense ratios and funds that charge no transaction fees. Its educational content includes the company’s own equity ratings, as well as analyses and commentary from the industry’s top research firms. Customers can also get dedicated financial advice in creating a personalised investment plan to meet their US investing goals. Charles Schwab users may open either a cash or a margin account. The latter will be useful to take advantage of timely market opportunities by borrowing against your eligible securities.
Withdrawing money from a brokerage account
No matter what your investing goals are and which service you chose to reach them, there comes a time when you need to withdraw money from a brokerage account. It’s not quite as fast or easy as it is to get money out of your ordinary bank account.
First of all, you need to realise that you must wait for the stock trading deal to settle before cash is available for withdrawal. This typically takes two business days, although some services may settle trades quicker. If you have a margin account, your broker might let you take the cash out before your trades settle. However, you could be charged margin interest for such a withdrawal.
Depending on the service provider, you may be able to transfer the money to a bank account, credit/debit card, e-wallet, wire it, or request a physical check. Withdrawal via bank transfer is by far the most common option. It is available at basically all brokers. E-wallets may be convenient, but they are rarely available as a withdrawal method. Some brokers supporting PayPal are Plus500, Pepperstone, City Index, XTB Trading, IC Markets, FpMarkets, etc.
Consider the related fees and time needed to receive your earned money. Each provider has its own fee system. Wire transfers are usually most costly. E.g. Ameritrade doesn’t charge for bank transfers, but wire transfers cost $25.
Interactive brokers have certain withdrawal limits. Thus, account holders without a security device are limited to a maximum withdrawal of 50,000 USD per day and a maximum withdrawal of 100,000 USD in five business days. Other brokers may have different rules, so check the policies before you make a withdrawal request.