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How to buy US stocks from Australia in 2024
The best ways to invest in US shares and become your very own Wolf of Wall Street.
So you've been watching on jealously as stocks like Nvidia, Tesla and Apple go higher and higher and decided you want a piece of the action.
Thankfully, investing in US stocks from Australia has never been easier (or cheaper).
All you need to do is sign up to a broker with access to Wall Street.
How to buy US stocks from Australia in 4 steps
- Choose an online broker or trading platform that offers US stocks
- Open your US brokerage account
- Research what stocks you want to buy
- Submit your buy order
1. Select an online broker or trading platform
If you're looking to buy US stocks, you'll need to find an online broker. The good news is that there are now plenty of options in Australia to choose from and the entire process is pretty quick and easy.
You'll need to have a few of your details handy to open an account, including your identification and basic banking information.
When choosing an online broker, try comparing them based on the fees they'll charge and the features they offer.
For example, if you're a newer investor, you might want to favour a broker that has strong education resources. If you plan on placing lots of trades, you'll want to find a platform with low trading fees.
Just make sure to select a broker that has access to US markets. You can check out some of the options in our comparison table below.
What is the best platform to buy US shares from Australia?
In terms of the cheapest trading fees, the best options for investing in the US stock market are CMC Invest and IG, which both offer $0 brokerage on US trades and access to all major US stock exchanges.
Webull also offer $0 brokerage on US ETFs and low commission on US stock trades. Other options for cheap US stock brokerage include moomoo (US$0.99), Tiger Brokers (US$1.99), Superhero (US$2) and Stake (US$3).
This trading fee data was checked and updated on 3 September 2024.
Compare share trading accounts with US stocks
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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.
"I opened a Stake account very early on and have found it to be my go to for US stocks. It has low FX fees and a heap of ways to fund your account. They've also been improving the interface year on year."
2. Open your US brokerage account
Once you've chosen your broker, it's time to actually register for an account.
The good news is, this step is usually free, although keep an eye out for subscription and ongoing fees.
The registration process takes place online, and if you're a new customer, you'll need to provide your basic information, including the following:
- Your name, address, date of birth and contact details
- Your tax file number (TFN)
- Proof of ID
- Linked bank account details
- A completed W8BEN form
The W8BEN form is a requirement for foreign investors who want to buy US stocks. It is a tax form that allows overseas investors to claim a special tax status. Without this form, all foreigners who own US stocks would have to pay a 30% tax on their shares, plus a 30% withholding tax on dividends.
Most share trading platforms will provide you with a W8BEN form to fill in or will automatically apply for you using the details you entered to sign up.
3. Research what you want to buy
Now that you have an account, it's time to decide what you want to invest in.
You have 2 main options: individual stocks or US-market exchange traded funds (ETFs).
As part of your research though, you should work out what you own and why you want to own it. It can be beneficial to write down why you own a company for clarity of mind later on.
For now, let's start with shares, but the steps are pretty similar for ETFs as well.
Tips for picking US stocks
- Start out by looking at businesses that you are familiar with.
- Choose companies or sectors that you want to learn more about. This can include reading a business's annual reports and annual shareholder letters.
- Evaluate the business based on a number of key analytical tools. Your goal is to find undervalued investments. To find this, you can use a lot of tools such as P/E ratios, earnings per share (EPS), price to book or dividend payout ratios (depending on what you want to achieve financially through your shares). A lot of brokers will help you out with this stuff.
If you find all this stuff a little daunting at first, don't worry, you aren't alone. Over time, it gets a little easier.
Investing in US stocks via an ETF
Instead of picking individual stocks, it can be safer (and easier) to invest in a whole portfolio of stocks. This is where ETFs come in handy.
There are over 200 ETFs available in Australia and even more available on US exchanges.
Traditionally, ETFs track a stock market index. The two main market indices for the US are the S&P 500 index and the Nasdaq Composite index. While the S&P 500 is a portfolio of the 500 biggest public companies in the US, the Nasdaq focuses primarily on technology companies.
For this reason, S&P 500 ETFs have greater diversification and may be less volatile than Nasdaq ETFs.
The upshot of this is that Nasdaq ETFs will over-perform during periods when tech stocks are dominant, as has been the case over the last decade.
4. Buy your US stocks
Now that you've done your research and found a US business you'd like to become a part owner in, it's time to get on your brokerage account and buy the shares.
Remember, if you are buying US stocks, you are trading on the other side of the world.
If you're trading in our summer (November through to March), then the markets will open at 1.30am Sydney time. If you're trading during the winter (April through October), you can start trading at 11.30pm.
However, you can place your trades at a more friendly time.
There are a few different ways you can do this:
- Market order. This means you are telling your broker to buy the stock as soon as possible based on the best available price right now.
- Limit order. This will only be executed when the shares move to a predetermined price that you've selected.
- Other conditional orders. A conditional order allows you to set order triggers for stocks and options based on different price movements.
Other bits of jargon you'll need to know include the following:
- Ask. If you're the buyer, this is the price the seller is willing to take for the stock.
- Bid. This is the inverse. This is what a buyer is willing to pay for the stock.
- Spread. Putting the above 2 definitions together, this is the difference between the highest bid price and the lowest ask price.
- Stop loss orders. Once you own a share, you can set up a stop price or stop levels, which means the broker will automatically sell at the best available price should the share fall. Now note, you need a buyer, so it might fall to less than your predetermined stop loss.
Review your US stock portfolio
After deciding how you want to buy your US stocks, researching them and buying into the market, you need to review what you own.
While the stock price is obviously important, especially for psychological reasons, investors should actually be focusing on the business's performance.
After all, if you've found an undervalued stock, it doesn't mean the market will automatically see what you see straight away – otherwise, it wouldn't have been undervalued in the first place.
This can be especially true for larger more covered markets like the US.
When you are reviewing your US stocks, you should go back to your original thesis. If the management team is executing on what you want, then this is a sign that you should hold onto your shares.
If, however, your thesis is broken, then it can be an indication that it's time to sell.
When it comes to how often you want to review your US shares, this is largely based on your plans and time frames.
For example, if you have a long-term investment strategy, you may only check in and see how your shares are performing every month. If you have a medium-term strategy, it may be a good idea to check each night or each week.
Investing in US-themed ETFs
Exchange traded funds (ETFs) are an easy way to access the US market because they're listed on a stock exchange in the same way that stocks are.
They're popular because they let you invest in a whole portfolio of stocks at once, which can be less risky and cheaper than buying individual stocks.
Traditional ETFs track market indices which are usually a collection of some of biggest listed companies in a market. By investing in a US index fund ETF, you're investing in hundreds of major US companies.
Expert insight
"US-listed ETFs can often have lower fees than their counterparts on the ASX, which can be a reason to invest directly through the US market."
How do US indexes work?
Every stock market will have its own leading indexes that are used as a gauge for the performance of an overall market.
For instance, Australia's leading 2 indices are the S&P/ASX 200 and the All Ordinaries Index. They track the 200 and 500 largest companies in Australia.
In the United States, there are 3 main indexes - S&P 500, the Dow Jones and the Nasdaq.
The S&P 500 index is the most widely used and is simply the 500 largest companies in the US by market cap.
In comparison, the Dow Jones Industrial Average tracks just 30 of the largest companies on an antiquated share price weighting system.
The US's third index is the Nasdaq Composite, which tracks almost all the stocks on the tech-heavy Nasdaq exchange. The Nasdaq-100 index is also a popular index, which tracks the top 100 Nasdaq companies (and makes up around 90% of the value of the Nasdaq Composite).
Over the last 5 years, the Nasdaq-100 has a return of 149.28%, while the S&P 500 has returned 89.63% and the Dow Jones 55.10% (all returns updated on 3 September 2024).
What are some US ETFs I can invest in from Australia?
There are many ETFs listed in Australia that track the US stock market.
Because they trade on the Australian Securities Exchange (ASX), you don't need a share trading platform with access to US markets to buy in.
This can also help you save on currency conversion fees because you won't need to convert to US dollars in order to buy them, but may have higher management fees than US-based ETFs.
Australian ETFs that track the US stock market include the following:
- Vanguard U.S. Total Market Shares Index ETF (ASX: VTS)
- BetaShares NASDAQ 100 ETF (ASX: NDQ)
- ETFs FANG+ ETF (ASX: FANG)
- iShares S&P 500 ETF (ASX: IVV)
- The SPDR S-and-P 500 ETF (ASX: SPY)
For a look at some of the top performing ETFs in Australia, check out our guide to the best ETFs on the ASX.
Which trading platforms offer US shares?
The good news for Australians looking to invest in the US is there are a number of brokers that will let you trade commission-free.
Some platforms offer international accounts that are separate from their Australian trading accounts, such as CommSec, while others, such as IG, are fully integrated on a single platform.
Here are some of the platforms that allow US share trading in Australia:
- eToro
- moomoo
- IG Share Trading
- Superhero
- CMC Markets
- Saxo Invested
- Selfwealth
- Stake
- CommSec International
- nabtrade
- Westpac
- Interactive Brokers
You can compare some of these brokers in the table above.
What are the costs of buying US shares?
While all online investing comes with some fees, all markets are different. When it comes to US investing, here are some of the costs you'll face:
- Brokerage fees. Brokerage is the fee you pay each time you buy and sell. The good news is that there are a number of providers that charge $0 brokerage fees.
- Foreign exchange fees. If you are buying US stocks, you'll need to swap Australian dollars to US ones. Luckily, your broker will do this for you. Unfortunately, you'll have to pay a fee for it.
- Inactivity fees. Not all brokers will charge this, but some will charge investors a fee if they aren't trading with the broker within a set time frame.
- Subscription fees. Not every broker charges this, but it is something to keep an eye out for. Some brokers will make you pay a subscription fee to sign up for the service.
It goes without saying, but you will also have tax considerations on top of these fees (see below).
If you're looking for the cheapest stock brokers, you could see our guide here.
Back to topWhat are the tax implications for buying US shares?
From a tax perspective, there are no restrictions on any country buying US shares.
But there are 2 key pieces of information you'll need.
Firstly, Australians can avoid double taxation on their income in about 40 jurisdictions due to various trade terms between countries. The US is one of these countries.
Secondly, Aussies are required to have an up-to-date W-8BEN-E (W-8) form, and your broker should register you for one when you sign up.
If not, you will pay a higher rate of tax. The US Internal Revenue Service (IRS) will withhold 30% of dividends and 30% of sales proceeds.
The W-8 drops this to 15% of all dividends and 0% of sales proceeds, with this money instead being taxed in Australia.
To read more, please see the ATO's website.
So do I pay tax on US shares in Australia?
Yes, you'll need to pay tax on any profits you make from selling US stocks. Once you've completed your W-8 form, you won't pay any withholding tax on your investment profits by the US, but you'll still need to pay capital gains tax here in Australia.
Capital gains are taxed at the same rate as taxable income, but you'll receive a 50% tax discount on any capital gains you make on US equities that you've held for at least 12 months.
When is the US stock market open in Australia?
The leading US stock exchanges like the New York Stock Exchange (NYSE) and NASDAQ have trading hours between 9:30am and 4pm (New York time) every weekday. This means that the US stock market is open for trading during the night and early morning for investors in Australia. This can make it difficult to track the market and make trades during open trading hours.
However, many brokers allow you to place limit orders on US stocks, which means you can a specific purchase price and if the stock hits that price, your trade will automatically be executed.
You can also keep an eye out for platforms that offer "24/5" trading on US stocks. This means that you can access the US markets 24 hours a day from Monday to Friday, including the pre-market, regular hours, after-hours ann overnight trading sessions. Like New York itself, the US stock market never really sleeps.
How do I find the best US stock trading platform?
Make sure that you take the following features and questions into consideration when comparing the benefits of US share trading sites:
- 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 ASX-listed stocks.
- What's the exchange rate? Exchange rates vary from platform to platform and they 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?
You can check out our list of Australia's best rated trading platforms in Australia, including our Finder Award winner for Best trading platform for US stocks.
Back to topWhat are some of the risks of buying US stocks?
All investments come with risks and US stocks are no exception.
When you buy any type of stock, you run the risk of losing money if the price of the stock falls below your purchase price. In the worst case scenario, you could lose your entire investment if the company goes bankrupt - although this is uncommon.
A key risk to be aware of when trading US shares is that you may not have the same level of knowledge and expertise as you have when trading ASX shares. Investing in an area, industry or country that you know little about is risky, so it always pays to make sure you know what you’re getting yourself into.
Another factor worth considering is the tax implications of international trading. You don’t want to make any mistakes when declaring your income and find yourself on the wrong side of the ATO, so familiarise yourself with the tax treatment of your investments as soon as possible.
You also face currency fluctuation risks. Unfortunately, the profits you make on some of the stocks you own could be offset by the falling Australian dollar. The flip side is also true though – if the Aussie dollar is strong when you sell, it can add to your gains.
Pros and cons of investing in the US
Pros
- Access different investment opportunities. Trading via US stock exchanges lets you take advantage of investment opportunities that are not available in Australia.
- Superior returns. The US offers you the chance to outperform the Australian market.
- 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 a single national economy, is your portfolio really as diverse as you think? Buying international shares protects you against having all your eggs in one basket.
- Largest companies in the world. The biggest businesses in the world are listed in the US.
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 AUD-USD rate fluctuates frequently, which might negatively impact your investment. The exchange rate is an important consideration when trading.
- Additional fees. International trading accounts are sometimes subject to fees that Australia-only platforms are not, such as inactivity fees and exchange fees.
US stocks market update 2024
- July: The US stock market continued to break records with both the Nasdaq-100 and S&P 500 indices hitting new all-time highs in July. But US stocks had a dramatic end to the month after US recession fears and an unexpected turn of events in the Japanese yen carry trade saw markets drop almost 5%.
- June: The Nasdaq-100 has climbed to an all-time high of 19,908.86 points thanks to surging tech stocks like Nvidia and Apple. The S&P 500 has similarly scaled new heights, hitting 5,487 for the first time, with even the Dow Jones getting in on the act, climbing to 38,834.86 points.
Frequently asked questions
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. Read the Product Disclosure Statement (PDS) and Target Market Determination (TMD) for the product on the provider's website.
If you're looking to sign up for the best broker for US stocks, CMC Invest took out our award in 2024. To see a full list of award winners and how we picked them, click here.
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