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12 January 2023: US stocks rose overnight as investors predicted mild CPI figures. Based on low CPI predictions investors sought to front run official inflation figures which will be released this morning US time. Learn more.
29 December 2022: S&P 500 futures rose slightly on Wednesday night, as investors head into the final trading days of 2022. Dow Jones Industrial Average futures declined fractionally, losing 8 points. S&P 500 and Nasdaq 100 futures climbed 0.12% and 0.28%, respectively. The action follows a broad sell-off during the regular session on Wednesday as recession fears weighed on investor sentiment.
US stocks make up 55.9% of the global stock market, so it’s a fantastic chance to diversify your portfolio a little and get access to some of the world’s largest stocks. It’s really easy to get started, too, as it’s not much different to investing in UK stocks. US stocks have historically seen higher returns than those in the UK – not to say that this is an indication of the future results, but it’s drawn investors towards it like a moth to a flame.
For those of us that are in the UK, this means you need a stock broker that lets you trade US shares. Luckily, there are plenty available to choose from, including commission-free and low-fee providers. Find out how to invest in US stocks, more on why you might choose to and some things to keep in mind.
Can I trade US stocks in the UK?
You just need a broker that lets you invest in US stocks. We’ve listed some of these below with links to our reviews of them – check these out to find one that suits you. There are some things you need to take into consideration when investing in US stocks, including the fees involved and whether you need to fill out a W-8BEN form.
Which UK trading platforms let you buy US stocks?
Here are some UK trading platforms that offer US stocks, along with some of the key fees to do so. We’ve written in more detail about the fees you’ll come across when investing in US stocks.
| Provider | ISA? | US commission | Foreign exchange fee | Learn more |
|---|---|---|---|---|
| Trading 212 | Yes | £0.00 | 0.15% | Capital at risk |
| Hargreaves Lansdown | Yes | £11.95 | 1.00% | Go to site Capital at risk |
| IG | Yes | £10.00 | 0.50% | Go to site Capital at risk |
| interactive investor | Yes | £7.99 | 1.50% | Go to site Capital at risk |
| Fineco | Yes | £3.95 | 1.00% | Go to site Capital at risk |
| Saxo trader | Yes | £10.00 | 1.00% | Go to site Capital at risk |
| Freetrade | Yes | £0.00 | 0.45% | Go to site Capital at risk |
| Barclays | Yes | £6.00 | 1.00% | Go to site Capital at risk |
| Halifax | Yes | £0.00 | 1.25% | Capital at risk |
| AJ Bell | Yes | £9.95 | 0.75% | Go to site Capital at risk |
| Wombat | Yes | £0.00 | 0.65% | Go to site Capital at risk |
| iWeb | Yes | £0.00 | 1.50% | Capital at risk |
| eToro | No | £0.00 | 0.50% | Go to site Capital at risk |
| Degiro | No | £0.50 | 0.25% | Go to site Capital at risk |
| Stake | No | £0.00 | 0.50% | Capital at risk |
| Revolut | No | £1.00 | 1.00% | Capital at risk |
| Capital | No | £0.00 | 0.00% | Capital at risk |
How to invest in US stocks
- Choose a share-dealing platform. If you’re a beginner, our table below can help you choose.
- Open your account. You’ll need your ID, bank details and national insurance number.
- Confirm your payment details. You’ll need to fund your account with a bank transfer, debit card or credit card.
- Find the US stocks you want to buy. Search using the stock code or company name.
- Buy US stocks. Simply click “Buy” to finish your order.
You can invest in US stocks using a number of trading apps, brokerages, online share-trading platforms or by buying exchange traded funds. Each will give you different levels of access to the US stock market as well as trading options and features.
How much does it cost to invest in US stocks?
There are 2 key fees you need to consider when trading US stocks: the commission and the foreign exchange fees. Commission is the cost that a platform charges to allow you to make the trade. The foreign exchange fee, which you wouldn’t encounter when buying UK stocks (unless you’re abroad, of course), is the fee the provider charges you to change your money to US dollars. There may be other fees you need to consider as well, but these are the key ones.
Our table above of UK brokers that let you trade US stocks shows the fee for a US trade and foreign exchange fees of key providers. You can also check out an example, below, of how these fees work in practice.
Example: Fees when investing in US stocks
Say you want to invest in Tesla – you’ve done your research, you’ve looked into the risks and potential rewards involved and have decided to buy 5 shares.
At the time of writing, a Tesla share costs $774.39, so 5 shares would cost $3,871.95. You’re interested in 3 popular providers, including 2 that are commission free, and 1 that charges fees for trading, and wish to compare the fees you’d pay. The providers are Freetrade, eToro and Degiro.
| Provider | Fee | What the fee is made up of |
|---|---|---|
| Freetrade | £15.06 | 0.45 foreign exchange fee |
| eToro | £16.74 | 0.5% foreign exchange fee |
| Degiro | £10.54 | €1, plus a 0.25% foreign exchange fee |
* This is a fictional, but realistic, example.
A commission-free platform might appear to be the cheapest way to buy US stocks, but that’s not necessarily the case. Once you’ve factored in foreign exchange fees, it appears that Degiro offers the cheapest option when buying US stocks, based on buying 5 shares of Tesla at the time of writing.
Why invest in US stocks?
Over the last decade, the leading US stock indices have given investors much higher returns compared to those in the UK, typically because of the rise of technology — investors that were only invested in UK or European stocks may have missed out on bigger gains. Of course, past performance is no guarantee of future results, so you’re not going to make huge gains by investing in these stocks, but you can add additional diversification and get a chance to get hold of some of the most recognisable companies in the world.
The US stock market is home to many of the largest companies on the planet, such as Apple, Amazon, Microsoft and Facebook. Along with access to the world’s leading companies, the US stock market also includes the New York Stock Exchange and NASDAQ, which are 2 of the world’s largest stock exchanges and offer deep liquidity and extensive trading opportunities.
“It’s just a really dynamic, exciting market with the broadest range of products,” Stake co-founder and CEO Matt Leibowitz told Finder. “It lets people diversify the way they invest.”
A couple of decades ago, it was difficult and costly to invest in foreign stocks. These days, many trading platforms and brokers offer low-cost access to many international markets, including the US stock market.
How do US stocks perform?
The best way to understand how US stocks perform is to take a look at the 2 major US stock exchanges: NASDAQ and the New York Stock Exchange (NYSE).
Two in three people (67%) in our poll were planning to buy stocks and shares
Finder survey of 2,000 people, May 2020
Download investment statistics PDF
All the content may be republished with a link to this page
What to keep in mind when trading US stocks
- How much is brokerage? Compare the fee each company charges every time you place a trade on US stocks. Be aware that this will be different to broker fees for UK stocks.
- What’s the exchange rate? Exchange rates vary from platform to platform, and this will partly be used to offset low broker fees. Check what these are first.
- Will you need to pay a monthly fee? Some platforms require you to pay a monthly fee in order to keep your account running or to access certain features.
- How is market data displayed? Check how up-to-date the market data offered by each platform is – being able to make trades based on current information is critical.
- How many international markets can you access? Some platforms offer access to a few key international markets while others let you buy and sell shares on a much larger number of exchanges.
- How easy is the platform to use? Is it fast, simple and convenient to execute a trade and monitor market performance?
- What trading options are available? Is the platform just online or can you also place trades over the phone? Are flexible options like limit orders available to let you take advantage of market fluctuations?
- Are education and research resources available? Trading shares is complex, so does the platform offer the necessary tools to increase your investment knowledge?
- Is customer support available if you need it? How can it be accessed and when?
- Can I fill out a W-8BEN form electronically? You need to fill out a W-8BEN form when trading US stocks to determine your tax status. Some brokers let you do this electronically while others ask you to return one by mail.
Pros and cons of investing in US shares
Pros
- Access different investment opportunities. Trading via US stock exchanges allows you the freedom to take advantage of investment opportunities that are not available in the UK.
- Increasingly more affordable. As a growing number of online share trading platforms compete for market share, brokerage fees are becoming more affordable.
- Diversify your portfolio. If all your investments depend on the performance of one national economy – e.g. the UK’s – is your portfolio really as diverse as you think? Buying international shares protects you against having all your eggs in one basket.
Cons
- Brokerage fees. You’ll need to contend with potentially higher brokerage fees whenever you place a trade on an international share market.
- Exchange rates. The USD-GBP rate fluctuates frequently which might negatively impact your investment.
- Additional fees. International trading accounts are sometimes subject to fees that UK-only platforms are not, such as inactivity fees and exchange fees.
Bottom line
Choosing to invest in US stocks can be a great way to get access to some rising tech stocks and diversify your portfolio. It’s a popular market for investors, but you need to make sure you know about additional fees, such as for currency exchange, that you’ll have to pay as well as commission. Work out how much you’ll spend before buying the stocks. You need to make sure you choose a broker that lets you trade US stocks.
All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Past performance is no guarantee of future results. If you’re not sure which investments are right for you, please seek out a financial adviser. Capital at risk.
UK brokers for US stocks
Table: sorted by promoted deals first
All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Past performance is no guarantee of future results. If you’re not sure which investments are right for you, please seek out a financial adviser. Capital at risk.
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Ask an Expert
Why is it so difficult to find a US broker where I can buy shares. I don’t want EFT’s or CFD’s I want to buy a specific share and hold the share certificate.
Help!!!
Hi Mannie,
Thanks for your question. These days, there are a number of online trading apps and brokers that let you buy US shares directly. If you’re looking for a low-cost way to invest in the US stock market, you may want to consider apps like Robinhood, Freetrade or Stake, all which offer the ability to buy US stocks directly.
I hope this helps, but please let me know if you have any other questions.
Regards,
Tom