4 steps to buying international shares from Australia
- Compare brokers with access to global stocks.
- Open your account by providing an ID.
- Fund your account by transferring money from your bank account.
- Search and select the shares you want to invest in and start trading.
Investing in the global share market is a lot like investing in the Australian market. But you'll need a broker that offers you the option to invest overseas.
This guide explains what to look for in an international share trading account, how to open one and what to do with the account once you've opened it.
Read on to learn more or start with the basics of share trading if it's new to you. If you already know how to buy international shares, you can simply compare brokers and open an account.
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Disclaimer: Trading CFDs and forex on leverage is high-risk and losses could exceed your deposits.
Why you should buy international shares
Investors are being urged to think globally as some of the largest opportunities are listed abroad.
Many of the household names that you would be familiar with such as Google, Ford, Unilever, Pfizer and BP are all foreign-owned and listed overseas despite their prevalence in Australia.
And while the Australian market offers opportunities to investors, it is less than 2% of global trade.
As a smaller market, if you exclusively focus on buying Australian shares, you could increase your exposure to Australian economic factors. For example, if Australia goes into a recession that does not impact the rest of the world, your exposure will be negatively impacted compared with an investor who buys shares in both Australia and overseas markets.
Despite the massive opportunities overseas, there is still a myth that investing overseas from Australia is more time-consuming and expensive.
But in fact, it is the complete opposite, with the cheapest brokerage and smaller minimums often being on foreign brokers.
The rest of this guide will help dispel some of these myths and help you buy international shares from Australia.
How to buy international shares
There are 3 main ways that you can access global shares from Australia.
You can invest directly in shares listed overseas such as Meta and Apple by using a broker with an international share trading platform.
Alternatively, investors can purchase a global-themed exchange traded fund (ETF) or managed fund.
Australians can also gain international exposure through contracts for difference (CFDs) that track global shares. (Note: This isn't the same as buying shares directly but instead you are tracking price movements. Investing in CFDs comes with more risk.)
Trade international shares with one of these brokers
Important: Share trading can be financially risky and the value of your investment can go down as well as up. “Standard brokerage” fee is the cost to trade $1,000 or less of ASX-listed shares and ETFs without any qualifications or special eligibility. If ASX shares aren’t available, the fee shown is for US shares. Where both CHESS sponsored and custodian shares are offered, we display the cheapest option.
Trading CFDs and forex on leverage is high-risk and you could lose more than your initial investment. It may not be suitable for every investor. Refer to the provider’s PDS and consider the risks before trading.
Step 1: Compare options and choose a broker
If you want to buy international shares, you'll need to find the right broker that allows you access to foreign markets.
But before you sign up it is worth comparing brokers on the following:
How much commission does the account charge for the execution of a trade? There may be flat rates, percentage rates or even no brokerage fees at all.
Access to markets
Make sure when you are buying international shares that your broker aligns with where you want to buy. This sounds obvious but signing up to a foreign broker won't automatically gain you access to all international markets. The big ones are the US markets like the New York Stock Exchange (NYSE) and the National Association of Securities Dealers Automated Quotations (NASDAQ), which most providers will allow you to access, but not every account will let you trade everywhere in Europe and Asia.
How long does it take for a transaction to be executed? Timeliness can be important when buying international shares.
How big is the buffer? Most international share trade orders will have a "buffer" applied to them by the share trading platform provider. The buffer is a percentage of the order value, which is added to the cost of the order to protect the provider from currency fluctuations while the trade clears, ensuring that they don't lose money on routine trades.
How much of a cut does your provider take? When converting currencies, the provider may take a cut in the form of a percentage fee on currency converted. Often brokers that charge $0 commission will charge a higher foreign exchange (FX) fee.
Does the provider charge any fees for opening an account? The benefits it offers may not always be worth it.
What investment research tools are available? Are you seeing real-time market information or is there a delay? Are the research tools free to use or do they cost extra? It's a lot easier to buy low and sell high when you've done your research, rather than relying on luck alone.
Customer service and access
Does your provider have a share trading mobile app or desktop access only? Can you contact the provider outside of business hours? What are your options for getting in touch? Is it known for being helpful or not so much? When you open an international share trading account you're using a service and you should expect a certain level of customer assistance.
Do you have to spend more than you want or not as much as you want? One of the main restrictions to look out for when choosing an account is the presence of limits, which may be minimums or maximums that apply. You may not be able to make trades above or below a certain dollar value.
Step 2: Open your account
Once you've decided on an online broker, you can open your share trading account. If you already have a bank account with that provider then you can usually sign in via its online banking portal. If not, you will have to open a new account.
To open an international share trading account you'll generally need to meet the following eligibility criteria:
- Be 18 or over
- Have an Australian residential address
- Have a mobile number
As part of the application process you will typically need to provide:
- Personal photographic identification (such as your driver's licence, passport and/or proof of age card)
- An Australian business number (ABN) and/or tax file number (TFN) if applicable
When opening the account you'll be asked to choose whether you'll be trading as an individual, with a joint account (for example, with your partner), as a company or organisation or on behalf of a trust, like a self managed super fund (SMSF). Because share trading has income and tax implications you must provide details of your income and occupation. Along with your personal information, you may be required to disclose the source of your income and the origin of your financial position.
After you've provided your personal details, you're up to the account set-up stage. This involves providing the details of your linked bank account, setting up financing options if applicable and choosing from the various options that may be available. Once you've confirmed everything and double-checked your details, you're ready to load your cash management account and start trading.
Already have a share trading account?
Sometimes, providers will require that you open an account for local shares and a separate account for international shares. Since you're already signed up to the broker, most of your information will already be saved meaning buying international shares should be a simpler process.
Step 3: Fund your account
If you want to start trading right away, you'll need to make sure you have enough funds in your linked account to execute the trades, plus any broker fees that will apply. Remember that when you transfer funds into your linked foreign currency account, you'll usually have to pay a currency conversion fee. It can take a few days for your funds to be loaded into the cash account, so keep this in mind when you decide you'd like to make a trade.
Step 4: Start buying international shares
Once you've set everything up, you can trade online through your new international share trading account. Expect to see a dashboard with features such as current share prices and changes over time and options to buy, sell or research. With the big banks and other trading accounts geared towards beginners, you may find tutorials and introductory material to help acquaint you with the available features.
What's the difference between Australian and international share trading?
When trading shares, you can choose to do it domestically or internationally.
The Australian share market is made up of businesses listed on either the Australian Stock Exchange (ASX), National Stock Exchange (NSX) or Chi-X.
While not every business has to operate in Australia to list here, the majority do. Investors on the ASX trade between 10am and 4pm (Sydney time), Monday to Friday, with Australian investment options overall making up around 2% of the global trade.
Trade shares from global markets around the world 24 hours a day, subject to local market hours, including big global brands and household names. Gain access to more options, but also experience new risks and challenges.
International stock exchanges include the London Stock Exchange (LSE), NYSE, NASDAQ and many others.
Compared to domestic trading, there are both advantages and disadvantages to trading shares internationally.
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Pros of buying international shares
- Gain access to a wider variety of investment options.
- Most of the largest companies in the world trade on foreign markets.
- Gain exposure to different economic forces and protect yourself against downturns in the Australian market.
- You can trade 24 hours a day rather than only within set business hours.
- More buyers: The actual value of your shares depends on how much you can sell them for. When trading internationally, there may be a larger pool of investors and you might find it's easier finding a buyer.
Cons of buying international shares
- Exchange rates can fluctuate and can significantly hurt (or help) your return on investment.
- Foreign policy can affect your returns. It's possible that changes to another country's foreign policies, local instability or other issues can impact the value of your investment in ways beyond your control. This is a largely uncontrollable risk.
- Taxation and related issues may be more complicated when trading international shares.
- Added costs including foreign exchange fees and levies.
Making big trades? Look for lower exchange rates, research tools that allow you to make more reliable investments and flat broker fees rather than percentage rates. Where applicable, it may be worth accepting higher flat fees in exchange for lower percentage rates. Avoid low maximum limits which might constrain your trading.
Making a lot of small trades? You may want to avoid flat fees that take a big chunk out of the potential profits of each trade and stick to percentage rates that will cost you less. Low maximums are less of an issue, but high minimums might be a problem.
How will you diversify your portfolio? Not all accounts will give you the same options. Plan what kind of trades you want to make and consider whether a given account will let you trade CFDs, whether you can trade ETFs and if you are able to do forex trading through the same platform.
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Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading CFDs and forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades.