If you don’t have even the slightest desire to wet your beak in the US stock market at this stage, you clearly haven’t been paying attention. Last year, it was pointed out that Amazon (NASDAQ: AMZN) was worth more than the entire ASX300 combined – but it goes beyond just one company alone. As of 2021, the US share markets make up close to 40% of the world’s stock market capitalisation, whereas the ASX makes up less than 2%. And it’s safe to assume everyone is well aware of the historic gains experienced by Tesla (NASDAQ: TSLA) and GameStop (NYSE: GME), respective corrections notwithstanding. Regardless, those of you who are keen on getting in on the action have now arrived at the trillion-dollar question – how the hell do I buy US shares here in Australia?

It’s a nebulous topic that often gets muddled with technical complexities, and could quite literally fill tomes. After all, the proverbial game has seen quite an evolution. Gone are the days of funding voyages across oceans and reaping a percentage of the profits. Now, tweens who haven’t hit puberty have the power to bring multi-billion-dollar hedge funds to their knees armed with nothing more than Reddit, a Robinhood account, and meme-tier herd mentality (and somehow win after the dust has settled).

RELATED: Why GameStop Stocks Have Climbed +3,600% In Less Than Six Months



For the sake of getting you started promptly, we’ll avoid all the navel-gazing about risk philosophies, price-to-earning ratios, the importance of diversifying portfolios, and so forth. Instead, we’ll just be covering the basic mechanics of investing your money into US-listed companies without having to physically stand on the chaotic trading floor of Wall Street’s New York Stock Exchange.

So sit back, get comfortable, and have some formal ID ready to verify those share trading accounts – we’ve got a lot of ground to cover on buying US shares in Australia.

How

No matter what the online broker and share trading platform, how you buy US shares in Australia come down to just a few simple steps:

  1. Pick an online broker or share trading platform which gives you access to US stocks.
  2. Sign up for a share trading account.
  3. Verify the share trading account with official ID – e.g. driving licence, passport, birth certificate, etc.
  4. Transfer funds from your bank account into your share trading account.
  5. Search & select the international shares you want to invest in.

The Best Online Brokers & Share Trading Platforms


eToro

Minimum Deposit: US$200
Brokerage Fee / Commission:
$0
Currency Conversion Fee:
from 50 pips
Withdrawal Fee:
$5
Management Fee:
$0
Inactivity Fee:
$10/month after 12 months


Stake

Minimum Deposit: $50
Brokerage Fee / Commission: $0
Currency Conversion Fee: 0.7%
Withdrawal Fee: $2
Management Fee: $0
Inactivity Fee: $0


Sharesies

Minimum Deposit: $0
Brokerage Fee / Commission: 0.5% (trades up to $3,000), 0.1% (trades over $3,000)
Currency Conversion Fee: 0.4% (calculated on amount to exchange, deducted from order amount)
Withdrawal Fee: $0
Management Fee: “When you invest in an ETF, you’re charged a management fee. This is charged by the fund provider – not Sharesies – and included in the share price.”
Inactivity Fee: $0


Superhero

Minimum Deposit: US$100
Brokerage Fee / Commission: $0 (on trades of $1,000)
Currency Conversion Fee: US$0.50 per AU$100 transferred
Withdrawal Fee: $0
Management Fee: $0
Inactivity Fee: $0




CMC Markets

Minimum Deposit: $0
Brokerage Fee / Commission: $11 or 0.1%
Currency Conversion Fee: 0.6%
Withdrawal Fee: $0
Management Fee: $0
Inactivity Fee: $15/month after 12 months


HFtrading

Minimum Deposit: $250
Brokerage Fee / Commission: $0
Currency Conversion Fee: $0
Withdrawal Fee: $50 if trading activity is low or withdrawal amount is less than $100
Management Fee: $0
Inactivity Fee: $80-$200/month after 60 days


Interactive Brokers

Minimum Deposit: $0
Brokerage Fee / Commission: US$1 minimum to 1% of total trade value
Currency Conversion Fee: $0
Withdrawal Fee: $0
Management Fee: $0
Inactivity Fee: US$10/month if brokerage fees on trades are less than US$10 – tiered system where inactivity fee equals US$10 minus broker commissions, e.g. US$6 brokerage fees in one month = US$4 inactivity fee


Saxo Markets

Minimum Deposit: $1,000
Brokerage Fee / Commission: US$9.90 or 0.1%
Currency Conversion Fee: 0.1%-0.75%
Withdrawal Fee: $0
Management Fee: $0
Inactivity Fee: Up to US$150 after 180 days


SelfWealth

Minimum Deposit: $1,000
Brokerage Fee / Commission: US$9.50/trade
Currency Conversion Fee: 0.6%
Withdrawal Fee: $0
Management Fee: $0
Inactivity Fee: $0


Westpac

Minimum Deposit: $0
Brokerage Fees / Commission: US$19.95 for trades up to US$5,000|US$29.95 for trades up to US$10,000|0.31% for trades above US$10,000
Currency Conversion Fee:
Withdrawal Fee: $0
Management Fee: $0
Inactivity Fee: $63.50/year after 12 months


CommSec International

Minimum Deposit: $0
Brokerage Fees / Commission: US$19.95 for trades up to US$5,000|US$29.95 for trades up to US$10,000|0.31% for trades above US$10,000
Currency Conversion Fee: 0.6%
Withdrawal Fee: $0 for share trading accounts opened after November 1st 2012
Management Fee: $0
Inactivity Fee: $25/year after 12 months


nabtrade

Minimum Deposit: $0
Brokerage Fees / Commission: US$14.95 for trades up to US$5,000|US$19.95 for trades up to US$10,000|0.11% for trades above US$20,000
Currency Conversion Fee: 0.5%-0.8%
Withdrawal Fee: $0
Management Fee: $0
Inactivity Fee: 0.5% of average daily international holding balance/month after 12 months



RELATED: The Service That’ll Notify You Every Time Elon Musk Tweets About A Stock

How

Helpful Tips

Do your research

When it comes to investing, beyond what brokerage fees and commission a platform is charging. There’s no such thing as knowing “too much” – unless we’re talking about insider trading, in which case… don’t do that. There are countless variables that you have zero control over. The one thing you can absolutely influence, however, is undertaking some due diligence. Ask yourself the necessary questions like whether this is where your money should be, what an acceptable risk profile is, and so forth.

At the very least, have a rudimentary understanding of how the business behind the ticker code works. Does the company actually make money? If so, how? Is it enough to warrant the price of its stock (see: price/earnings ratio)? If the company doesn’t make any money – or anything tangible, for that matter – then there are even more questions you need to be asking, like the reasoning behind the hype and how long this upward trajectory can possibly last (see: bubble).

If you’re unsure about anything, please refer to official financial services.

Learn the difference between “trading” and “investing”

Trading is a short term game buy and sell shares in a relatively quick fashion to make an equally quick profit. Investing, on the other hand, involves buying shares and holding them for the long term. If the former is more your speed, go right on ahead. But a major advantage to the latter is far less volatility. You pick something you believe in, hang on tight, and watch it grow.

To quote the legendary investor, Oracle of Omaha, and once-in-a-generation visionary behind Berkshire Hathaway – Warren Buffett: “If you aren’t thinking about owning a stock for ten years, don’t even think about owning it for ten minutes.”

RELATED: 10 Pearls Of Wisdom From The ‘Oracle of Omaha’ Warren Buffett

Use a stop loss

Online brokers and share trading platforms will often have the option to set a stop loss. This function allows you to automatically sell your shares when it dips below a certain price, thereby – wait for it – stopping any further losses. This is, however, not always the most practical choice if you’re holding a volatile US stock likely to exhibit some movement day to day, month to month, and year on year. As we know, especially after the swing-happy period of investing that was 2020, something can plummet all the way down to $20 and still rally itself back up to $150.



You have nothing to lose by freeholding

Some of you may be confused by this term due to the fact it has a slightly different meaning in terms of property and real estate finance. Freeholding is when you sell part of your position to cover the initial investment cost and let your profits take the reins from there. For example, if I invested $5,000 into US stocks and the total value increased to $15,000, I’d sell enough to reimburse myself for the original $5,000 and hold the remaining $10,000. Effectively, any result is still technically a gain.

… and as always – leave your emotions at the door!

Bull vs Bear market

Bull markets occur in times of optimism when investor confidence and expectations for strong growth are high. The commonly accepted definition for what constitutes a bull market is when share prices rise by 20% after two declines of 20% each. Bear markets are obviously the opposite, characterised by negative investor outlook, declining economic prospects, and periods of prolonged price declines. The commonly accepted definition for what constitutes a bear market is when shares decline by more than 20%.

When is the best time to start investing in the US stock market?

There’s an old saying that the best time to start investing was yesterday, and the second-best time is today. And while the earlier the better, in reality, it’s whenever you’re in a position where you can comfortably spare the funds. There will always be moments that seem like you’ve “missed the boat” on some once-in-a-lifetime opportunity, but the opportunity to build a nest egg never has a hard time limit (nor when it comes to investing in US stocks). And just to just in case you were looking for a more tangible direction before entering the international markets / stock exchanges, to quote the great one himself Warren Buffett once again: “Be fearful when others are greedy and greedy when others are fearful.”

What are FAANG stocks?

FAANG stocks are the US stocks that represent five tech giants which need no further introduction: Facebook (NASDAQ: FB), Amazon (NASDAQ: AMZN), Apple (NASDAQ: AAPL), Netflix (NASDAQ: NFLX), Alphabet (NASDAQ: GOOG) + (NASDAQ: GOOGL) – and as you can imagine, given the sheer ubiquity of their impact on the modern world, they make up a considerable portion of the S&P 500 Index. Meaning they’re relatively safe bets for long-term growth.

What are CFDs?

A CFD or Contract For Difference is a contract between two parties: a buyer and a seller. It stipulates the former must pay the latter the difference between an asset’s current value and the asset’s value at contract time. This provides traders and investors alike with an opportunity to make a profit from price movements without having to own said assets. A CFD doesn’t take something’s underlying value into consideration – only the difference in price between trade entries and exits.

RELATED: ‘Big Short’ Investor Michael Burry Warns Mother Of All Crashes Is Coming For Crypto & Meme Stocks

How

What are shorts?

A short or short position is when a trader “borrows” securities – translation: fungible + tradable financial instruments that raise capital in public and private markets, e.g. equity, debt, or hybrids – instead of holding it. This is accomplished by acquiring something like a stock/share, selling it off, with the intention of repurchasing and returning it at a lower price. The more its value decreases in the time between selling it off and repurchasing, the more profit there is to be gained. But if the value increases, as in the case of GameStop, then the individual(s) holding the short position lose money. Increasing the value en masse in such a manner is what’s known as a short squeeze.



How are US shares taxed in Australia?

Australian residents can be taxed on worldwide income – not just Australian securities – which includes holdings from US markets. To figure out what you owe on your US shares, simply take the price said shares were sold for and subtract the original price. The remaining figure is your capital gain or capital loss. In terms of capital gain, individuals pay the same rate as their income tax rate for that financial year. A similar process applies to Australian shares.

How can I avoid capital gains tax on shares?

As much as we’d like to get away with keeping all our money, it isn’t possible. The only two things that are certain in this lifetime are, of course, death and taxes. But there are ways you can reduce capital gains tax. By holding an investment for over 12 months, capital gains tax is reduced by 50%. Which is all the more incentive to be like Buffett and play the long game. Again, a similar process applies to Australian shares.

Any advice found within this article on buying US shares / how to trade US stocks is strictly general, not to be taken as hard financial advice as it does not take into account your personal objectives, financial situation, or needs. Consider the risks involved before you get involved, take a look at the terms and conditions of all products involved – e.g. specific fees and charges, foreign exchange conditions, any product disclosure statement, other important information, etc – and please refer to official financial services for personal advice.

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