Investing in foreign stocks can be beneficial for investors in Malaysia. It will lead to a diversification of your portfolio and help manage currency fluctuations, among other things. Thus, in this article, we will be discussing how to invest in the US stock market from Malaysia, and why you should start penetrating the foreign stock market.
There are two easy ways for you to start investing in the US stock market. One way is to use a foreign broker. The other way is to use a local brokerage firm that provides foreign stock trading facilities.
Fortunately, most brokers should be able to help you process the opening of a CDS account when you open the trading account.
One way to purchase a foreign share is to open a trading account with an international broker that will allow you to buy foreign stocks. For instance, you can open a nominee account with a broker that will help you trade in foreign stocks. A nominee account is a type of account in which a stockbroker holds shares belonging to the clients, making buying and selling of those shares easier. With a nominee account, brokers will hold the stocks for you, but as you pay for the securities, you will retain the ownership rights.
Another way for you to purchase foreign shares is to open a global trading account in Malaysia associated with the local investment banks and security firms. In this way, your money will be invested overseas, but the location of assets are local. Most Malaysians will opt to trade using a local broker as it provides convenience when you want to take your funds out.
If you are thinking about investing in the US stock market, the first thing that you need to have is sufficient capital. But how much is enough? What is the minimum budget requirement for you to invest in the US stock market?
Before you start investing, you need to at least have $200 (RM800) to $1,000 (RM4,000) to get started. If you’re starting with less than $1,000 (RM4,000), it’s fine to buy just one stock and add more positions over time. If you’re starting with a small amount, some brokerages may allow you to purchase partial shares. Besides, in the United States, you can buy just one single stock. However, in Malaysia, investors need to buy a minimum of 1 lot, which is equivalent to 100 shares.
However, never invest money in stocks that you will need in cash. Besides, new investors are advised not to go for more significant risks than you can take that your overall finances are at risk.
|Minimum of 0.18% and a maximum of around 0.25% per trade.||0.75 – 3 average spread cost||Zero Handling Fees|
|Minimum £3.00 (RM15) and a maximum of £8.00 (RM40) per trade||0.7% conversion rate||US$50 (RM200) fee on accounts which have not supplied a mandatory W-8 or W-9 form prior to the dividend ex-date|
|$0.00 fee per trade||$44.99 (RM200) for traders fee||Dividend Reinvestment Program (DRIP) with zero fee|
|Minimum $20 (RM80) or 0.15%, whichever is greater.||0.00192% on the contract sale||Collection fee 0.5% of net dividend
AUS & US tax charges; foreign 3rd party broker 1% of net dividend; 1% of dividend for additional charges
|Minimum $25 (RM100) or 0.40%, whichever is greater||0.00192% for the sale of contract||Scrip $20 (RM80) or $15 (RM60),
Cash $10 (RM40) to $80 (RM300),
1% on net dividend
|0.35% on Initial $40,000 (RM100,000)
0.25% on > $40,000 (RM100,000)
Minimum $30 (RM125)
|0.00192% for the sale of contract||Corporate excise fees for dividends flat rate RM2.50|
|Minimum $25 (RM100) or 0.40%, whichever is greater||0.00192% for the sale of contract||Dividend Handling fee RM5.83
Clearing Fee 0.03%
Dividend reinvestment total 29.61 (local), 31.73 (overseas)
|Minimum $50 (RM200) or 0.80%, whichever is greater||0.00192% for the sale of contract||Dividend Reinvestment/Handling RM2-65 per payment/ dividend cheque.
Dividend Reinvestment Plan (DRP) subscription: RM2-65 per (with additional stamp duty fees)
|0.70% on Initial $100,000 (RM400,000)
0.50% on > $100,000 (RM400,000)
0.30% on > $500,000 (RM2 million)
Minimum $35 (RM150)
|0.00192% on the contract sale||N/A|
There are many stockbrokers available in Malaysia that provide US stock market trading. Thus, you need to do your research on the best broker that will perfectly fit your investment profile.
One of the primary benefits of investing in the US stock market is the chance to grow your money. Due to its currency value versus Malaysian ringgit, and over time, the stock market tends to rise in value. In addition, there is more demand for US stocks worldwide. This will eventually lead to the opportunity to make money.
The US stock market investment has the benefit of providing diversification. With a different political and economic scene than Malaysia, investors will still have US stocks to buffer when the Malaysian stock market is not doing well. The stock also adds risk to a portfolio and the potential for substantial, rapid gains, helping you avoid risk-averse or overly conservative investment strategies.
There is a reason why most of the world’s largest companies are located in broader markets like the US or China. The market size in these countries is significantly larger, providing companies long runways to grow. Because most Malaysian companies have a limitation on how much they can grow locally, the US stock market will provide you with more growth opportunities.
As an investor, finding ways to diversify your portfolio is essential. Investing in the US stock market will not only help you in that, but it can also help you gain more profit. However, before you start, remember to prepare yourself with the right trading knowledge. Remember also to choose the right broker for you to mitigate the risk and loss of your investment.