Lets get into the details of how and where to buy shares, but first we should go over a few basic things.
The biggest reason for you to buy shares is to make money, shares have a big advantage over other forms of investment – for one, your shares are immune to inflation and are worth more when the company develops and rises in value.
How To Buy International Shares From Australia
The idea of buying shares from a company, for example Apple, Uber, McDonalds, Amazon or Google and later selling them when they’re worth more than at the time of purchase.
The reason you would choose to buy and sell US stocks is obvious, the US is full of the world’s leading companies, Microsoft, Android and. Many more – that is why you want to buy US shares over local ones.
It is important to keep in mind the fact that when buying US shares various laws and taxes may apply – for example if you are going to utilize a US based broker you will legally have to register with the IRS (Internal Revenue Service).
Two ways of Buying International Shares
There are two main ways to purchase shares from abroad, you can either buy international shares directly, or you could purchase stocks directly.
In order to buy international shares you can set up an account with an international broker, for example Etoro or Easymarkets.
Etoro offers you a wide selection of shares to buy as well as plenty of visual help and advice to help you pick the right shares to invest in. You can find a list with the top broker here.
Through Etoro you are able to buy shares directly – much like other brokers, this part is simple. The biggest difference between Etoro and other brokers comes down to rates and the the selection of investment choices, from my experience both of these are present available through the Etoro service.
As for Easymarkets, it is also an international broker much like the previously mentioned Etoro. From my personal experience, Easymarkets is less user friendly, you could argue that this makes it a more advanced tool.
The Other Method
Another method to buy foreign shares is to do it through a mutual fund, basically how that works is a follows, first a pool of money is collected from various participants in the programme – this money is then use to buy the share, next you are awarded a certain portion of the share.
you may be wondering why you should consider the mutual funds over a direct method, first of all – it’s safer for sure, unlike buying regular shares you get the safety og an index to make sure you don’t lose out on any investment.
However the above mentioned point comes at a cost in the form of limited authority over the placement of your money – since you’re using an index you will be placing your money in accordance with the success of a given investment, for example – more of your money would be put towards a successful business than a business that had a bad year.
The main thing that makes an index fund, also called a mutual fund great is the fact that it is not only safer, but also cheaper – the fact that the index fund requires no active management results in an overall cheaper experience, that is a considerable downside to using direct methods.
Naturally you can still use the previously mentioned platforms – those being Etoro and Easymarkets, that said they are not the only platforms available available.
That said there is still some merit to using the direct method, for an experienced user the ability control which one of the businesses to invest in is a very useful quality – in a way it’s like removing your safety wheels – and te safety net.
Buying shares in Tesla is quite simple with these brokers. In addition you have many other options like Afterpay shares, Amazon shares or Qantas shares.
How To Buy Nasdaq Shares In Australia?
Well, the first question is, what is Nasdaq? Nasdaq stands for “National Association of Securities Dealers Automated Quotations”.
It is described as by the Nasdaq team themselves as “an electronic exchange where stocks are traded”.
This is a very popular way of buying shares – it’s not something that to me jumps out as beginner-orientated, despite this – it’s still something a lot of the more professional and intermediate shareholders use.
If you’re interested in buying Nasdaq shares from Australia, here are the steps you can follow:
Step 1: Choose an international broker
One way to buy Nasdaq shares is by using an international broker such as Etoro or Easymarkets. These brokers offer access to a wide range of international shares, including those listed on Nasdaq.
Step 2: Create an account and verify your identity
To buy Nasdaq shares through an international broker, you will need to create an account and provide the necessary identification and verification documents. This process typically involves providing your personal information, such as your name, address, and date of birth, as well as submitting a copy of your passport or driver’s license.
Step 3: Fund your account
Once your account is set up and verified, you can fund it with Australian dollars. Some international brokers may also allow you to fund your account with other currencies, such as US dollars.
Step 4: Buy Nasdaq shares
After funding your account, you can start buying Nasdaq shares. To do this, you’ll need to search for the shares you want to buy and place an order through the broker’s platform. Make sure to research and understand the costs and fees associated with buying international shares before making any investment decisions.
Step 5: Consider using a local broker
Another option for buying Nasdaq shares is to use a local broker that offers access to international markets. Some Australian brokers, such as CommSec and CMC Markets, offer this service. However, using a local broker may limit your access to certain international shares and may come with higher fees.
Step 6: Understand the associated costs and taxes
When buying Nasdaq shares, it’s important to keep in mind that there may be additional fees and taxes associated with buying international shares.
For example, you may be subject to foreign exchange conversion fees or US taxes on your investments. Make sure to research and understand these costs before making any investment decisions.
Diversification Is Key
Diversification is a crucial aspect of any investment portfolio, including a portfolio of shares. It involves spreading your investment across multiple companies and industries to reduce the overall risk of your portfolio.
The goal of diversification is to avoid putting all your eggs in one basket, and instead, have a variety of investments that can help to mitigate the impact of market volatility and unexpected events.
One of the main advantages of diversification is that it can help to minimize the impact of poor performance by one company or industry on the overall value of your portfolio.
If you only invest in one company and that company experiences a significant loss, your entire investment could be wiped out. However, if you spread your investment across multiple companies and industries, a loss in one area can be balanced out by gains in another, reducing the overall risk of your portfolio.
To achieve diversification in a share portfolio, it is important to invest in companies from different industries and sectors, as well as companies of varying sizes and geographical locations.
This can help to reduce the impact of regional or sector-specific risks on your portfolio. For example, investing in shares of companies from different sectors like healthcare, technology, and finance, can help to reduce the impact of economic downturns on your portfolio.
Another important factor to consider when diversifying your share portfolio is to invest in both domestic and international companies.
This can help to reduce the impact of political and economic events in a single country on your portfolio. Investing in international companies can also provide exposure to different markets and industries, which may not be available in your domestic market.
Disadvantages Of Share Buying
For all the good that can come from holding shares of companies there are a good few risks and disadvantages to consider.
For one, your share is only worth as much as the percentage of the company which you bought – this means that if a business goes under or loses some value – you technically lose money.
Another downside is that there is no guarantee that the share will return to its original or higher worth, in other words – imagine buying Blockbuster shares before the rise of netflix.
If you choose the non-direct method and place your money in a mutual fund you will be stunted by the well rounded nature of the index model. When you put money into a mutual fund your money is still allocated to the less successful investments as well as the more successful ones.
While that can make up for the unlikely event of a drastic change of the value of an company, sadly most of the time you will only lose a bit of the overall earnings thanks to the fact you invested in the unsuccessful businesses albeit to a lesser degree.