How to buy overseas shares


I’m going to throw a question or two at you right now and you’re probably going to think I’m sporting with you, but I’m not. Have you ever thought of buying shares in Apple?

I’m writing on my laptop right now and have always used one of these extraordinary computers. I couldn’t even turn on a PC. I love Apple products and use them to the exclusion of all else. I always look at the endless queues of Apple fans outside their eye-catching stores but not for one second have I thought to myself: this is such a great business, I must buy shares in the company.

Have you?

You see, buying individual shares in overseas companies can have its pros and cons. Share prices can go up and down and if you’re exposed to just one or two shares, it can be risky. And not only do share prices move, so does the Aussie dollar. So when trading overseas, a smart investor will always cover themselves for currency fluctuations by ‘hedging’. More on that another time!

Anyway, at its current price of US$115.98, you’d have to have a wad of cash to buy a decent parcel of Apple shares.

To buy shares in US companies, you’ll need to find a trading platform that offers access to US stock markets, though most of our online brokers provide this service. You see, Apple’s stocks are listed in the US on the NASDAQ. Of course, the next question is: what’s the NASDAQ?

The acronym NASDAQ initially stood for the National Association of Securities Dealers Automated Quotations. It was given this name because in 1971 the NASDAQ began operations as the world’s first electronic stock market. In 1998, it was the first stock market in the United States to trade online, using the slogan “the stock market for the next hundred years”.

I want you to take this in, even though it’s jargon in a way, because together we’re building up your knowledge about shares, so understanding electronic stock markets like the NASDAQ is part of that learning.

The NASDAQ’s main index is the NASDAQ Composite. That’s where you find the big US tech companies listed. So of course you’ll find Apple there. As I said before, the NASDAQ operates online but its headquarters is located in Times Square, not far from the theatre district in Manhattan. It occupies the northwest corner of the bottom of the building at 4 Times Square. When we can fly again and you get the urge to go to the Big Apple, look up and see where one of the share powerhouses of the world lives, before you duck down 43rd street to see a show!

And here’s a few other names you might know very well: Facebook, Amazon, Netflix and Google (although Google is listed on the stock exchange under the name of its parent company, Alphabet). Heard of any of these?! They’re all tech stocks that are listed on the NASDAQ, which is the second largest stock exchange in the world, after the exceedingly large New York Stock Exchange (NYSE), which is based downtown in Wall St, Manhattan. The NYSE still has an actual trading floor and I’ve been lucky enough to be on that floor a number of times. Given the fact that most stock exchanges operate electronically now, it’s a real buzz to see a stock exchange as big as this still running a trading floor as well as its online activities.

So you can buy individual parcels of shares yourself, but here’s what I do.

I own Apple shares and other US companies indirectly because I’ve invested in funds that buy only overseas shares. There’s a company called WCM that operates out of Laguna Beach on the West Coast of the US and then there’s our local hero Magellan that have funds that give Australians exposure to overseas shares.

Most offshore equity funds will have holdings in some or all of Facebook, Amazon, Alphabet, Apple or Netflix (the FAANGs – another acronym!). But if you wanted to hold these FAANG stocks exclusively, there’s an ETF (see my article on ETFs) that tracks the “FANG+” index (10 stocks, including the 5 FANGs plus TenCent, Baidu and a couple of others) that trades on the ASX under the code FANG.

That’s enough for now. I’m not saying to go out and start trading because you know that we’re working together to build up your knowledge. And then I only want you to think about buying or selling when you feel confident and understand the risks involved. So we’ll come back to this topic on many occasions but remember, an apple a day may keep the doctor away, but learning about shares like Apple each day will bring riches your way.

Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regard to your circumstances.



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