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Not all brokers or trading platforms provide access to global stock exchanges, so if you want to buy and sell US shares, you’ll need to find one that offers the service for a cost effective brokerage fee.
A couple of decades ago, investing in global companies was fairly costly. Today, many trading platforms allow Canadian investors to buy and sell shares in Canada, the US and other international markets for less than $10 a trade in brokerage fees.
However, not all trading apps available in Canada offer access to US stocks. Some only offer Canadian shares or they may charge additional high fees for the service. Before signing up to a new account or a broker, it’s important to check which countries are on the books and what the associated fees are.
Online share trading platforms are one of the easiest ways to buy US-listed shares. By using a platform that offers US stocks you can deposit funds into your account and start buying and selling shares.
Each platform works in a different way, however the same general rules apply as with buying Canadian shares – with a few additional considerations. For example you’ll be charged a brokerage fee and a foreign exchange (FX) fee when you trade shares. Brokerage fees are sometimes higher on international accounts and there may additional costs such as an inactivity fee.
You can also invest in US stocks in Canada via exchange traded funds (ETFs) that hold US stocks. You can find out more about ETFs in our comprehensive guide.
There are many reasons for Canadian investors to own stocks listed in the US. In the last decade, Wall Street’s S&P500 index has delivered annualized average returns of around 14.1%, while Canada’s equivalent the S&P/TSX index returned around 6.9% for the same period.
US stock markets also offer a greater diversity of companies than what is available in Canada. The NYSE and NASDAQ are the two largest stock exchanges in the world in terms of market capitalization, and also offer some of the most lucrative opportunities in the world. Many of the world’s biggest global growth companies, such as Facebook, Amazon, Apple, Netflix and Google (FAANG) are listed in the US.
Aside from opportunities to profit, it’s important to have a diversified portfolio of stocks. This means investing in companies from a range of sectors as well as countries. If Canada’s economy slows down, stocks listed in another country can act as a buffer.
There are a growing number of Canadian online share trading platforms that offer access to international stock exchanges.
Here are some of the platforms that allow trading US stocks from Canada:
Make sure that you take the following features and questions into consideration when comparing the benefits of US share trading sites:
One of the key risks to be aware of when buying US stocks in Canada is that you may not have the same level of knowledge and expertise as you have when trading TSX stocks. Investing in an area, industry or country which you know little about is always risky, so it always pays to make sure you know what you’re getting yourself into.
Another factor worth considering is the tax implications of international trading. You don’t want to make any mistakes when declaring your income and capital gains. Familiarize yourself with the tax treatment of your investments as soon as possible to avoid fining yourself on the wrong side of the Canada Revenue Agency (CRA).
Finally, unlike trading Canadian-listed stocks, you’ll be on the hook for exchange fees. Plus, many brokerages also charge a currency conversion fee on top of that. Make sure to factor the exchange rate into your investments when trading US stocks from Canada.
Investing in US stocks is a solid way to diversify your portfolio and gain exposure to US players across multiple industries. Plus, it’s easier than ever before to buy and sell US-listed assets through popular platforms. Before you get started though, you’ll first want to consider the tax implications, foreign exchange rates, and any fees you may incur for trading internationally. As with trading any assets, there is potential for gains as well as losses, so make sure you research the stock and industry before you buy in.
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