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Question about buying foreign stocks

Discussion in 'International Markets' started by noob investor, Jan 25, 2019.

  1. noob investor

    noob investor

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    how do i buy stock in other countries? can i borrow money from broker to buy then pay them back? because of currency movement, the money i make might be neutralized by rising AUD.
     
  2. Zaxon

    Zaxon The voice of reason

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    It depends on the broker, but in most cases, the stock is bought like an ASX stock. However, the stock is held by a 3rd party holding company, typically a bank, instead of by an official exchange body such as CHESS. Expect annual fees to cover the expense of holding.

    As for currency, in some cases you may have to convert the money yourself upfront (like with IB), or your broker may simply "overcharge" you by a fudge amount, and then refund you the difference once the true currency amount is known.
     
  3. noob investor

    noob investor

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    wow it's that bad? there's on going fees even for long term investment? is it possible to trade with official exchange bodies?

    also wats a good platform? i was planning on using cmc markets but just read google reviews saying money just vanished from people's accounts. i need a platform that will not commit fraud or have software glitches.
     
    Last edited: Jan 26, 2019
  4. Zaxon

    Zaxon The voice of reason

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    As you're not a resident of a foreign country, shares are held by a custodian (which is a resident), for which there are yearly fees.

    I've never had any problems with Commsec or CMC Markets, and they are simple to use. Interactive Brokers has a very steep learning curve to learn their platform, though their fees may be cheaper.
     
  5. Zaxon

    Zaxon The voice of reason

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  6. noob investor

    noob investor

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    hey i have another question. do i pay tax to the country in question? do i pay tax twice or just to australia?
     
  7. Zaxon

    Zaxon The voice of reason

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    If it's with the US, you'll need to fill out a w-8ben form. If you don't, you pay 30% tax to the US on capital gains and dividends. If you do, then you pay 0% on capital gains, and 15% on dividends.

    As an Australian, you'll always have to declare your foreign earnings and pay the appropriate tax to the ATO. If you've already paid foreign tax, your Australian tax obligation may be reduced to reflect that, particularly if we have a tax treaty with that country.
     
  8. noob investor

    noob investor

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    hey thanks for all ur replies. about the holding price, is it "custody" in here? https://www.nabtrade.com.au/investor/pricing

    0.5% per month is alot, 6% a year, when they said 1+ trade is free, does it mean ANY amount of trade is free? im planning to buy 40k AUD worth in an american company (NASDAQ: NVDA), 6% is higher than mortage rates lol and they are just holding not lending money.
     
  9. Zaxon

    Zaxon The voice of reason

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    Yes, the custody fee is the fee paid to the 3rd party, international custodian.

    That reads to me that you don't pay the custodian fee, as long as you make at least 1 international trade per year, for which you'd be charged their brokerage as specified.
     
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