- How's it going today, guys?
Welcome back to the channel, hope you're having
a great day so far.
So in this video today I'm going to be answering
one of the questions that I've been getting
on almost a weekly basis for the last two years
and I apologize it's taken me this long
to make this video.
What we're going to be talking about today
is how to invest in the U.S. stock market
when you are from outside of the United States.
So I know that when you make videos on YouTube
it is a global audience, and a lot of my viewers
are actually not even from the United States
and you may decide that you want to participate
in the U.S. stock market.
Well, I'm going to show you guys three different
brokerages out there that may allow you to do this
and we're gonna go through some pros and cons
of each method because some are definitely better
than other options out there.
And if you do decide at the end of this video
that you wanna sign up for one of these different
brokerage accounts, I've included links
in the description below.
I am affiliated with Firstrade, that is one of the options
that I discuss in this video.
The other two I have no affiliation with,
but if you do decide to use my affiliate link,
it's totally optional, but it is a way
to give back to me for putting this video together
at no additional cost to you.
So your use of that link is definitely appreciated
but never required.
So starting off with number one here,
my number one choice for investing in stocks
when outside of the U.S., is going to be
going with Firstrade.
Now, Firstrade is the top of my list
for a number of different reasons
that we're going to get into in a little bit here,
but essentially Firstrade is a zero commission brokerage
out there that has a zero dollar minimum account balance
as well, and they allow a number of different countries
to participate in the U.S. stock market.
So if your country is on this list
of approved countries for Firstrade,
you can open up a brokerage account with them
without being a permanent U.S. resident
or resident of U.S. at all, and you also
do not need a Social Security Number
or Tax Identification Number.
Now the list of approved countries is definitely
a little bit limited, but this is because of tax reasons
at the end of the day.
If you're investing in the U.S. market
as a non-U.S. investor there are definitely tax implications
associated with that and there are only certain companies
where they have participation agreements in place
for taxation.
So the list of approved countries
that are allowed to invest in U.S. markets through Firstrade
include China, Taiwan, Hong Kong, Macau, Japan,
Mexico, New Zealand, Singapore, South Korea, and Israel.
So if you are in one of those approved countries,
you can invest in U.S. markets through Firstrade,
if you're not, you're going to want to hear about
option number two and option number three in a little bit.
Now what's important to note here is that
if you are investing through Firstrade with an international
account, you are actually owning the underlying assets.
And if you're a U.S. resident investing in U.S. stocks,
you probably have absolutely no idea
what I'm talking about, but in a little bit here
for number two and number three we are gonna have to
introduce an investment vehicle known as a CFD
which is entirely different than owning
an actual stock itself.
But if you are investing through Firstrade and you're on
one of those approved countries, you are owning
the underlying assets themselves, and you are not purchasing
what is called a CFD.
So option number two is a very popular trading app
that allows you to trade cryptocurrencies,
forex, stocks, bonds, ETFs, all kinds of things
of that nature, known as eToro.
Now, eToro is not allowed in the United States
again due to tax reasons and different reasons
of that nature, possibly regulation issues as well,
which we're going to get into in a little bit here.
Now, if you're from outside of the U.S.,
they participate with about sixty different countries,
it's too many for me to list in this video,
but they have many helpful resources
on their website that tell you what countries
they are allowed to participate with.
But there is a huge difference with using
eToro versus Firstrade and that is that when you buy stocks
on that platform, you don't actually own
the underlying asset.
Instead, what you're purchasing is something called a CFD
and a CFD is known as a contract for difference.
And again, this means that there is no ownership
of the underlying asset, in this case the stock.
Essentially what you're purchasing
is something called a derivative,
and this is a type of speculative investment vehicle.
So essentially, the price of the CFD
is derived from the underlying price of that stock,
but you have no underlying ownership
of the actual stock itself.
So there are many risks associated with trading CFDs
that you need to be familiar with.
In fact, according to an Investopedia article
about CFDs, 66% of people who buy CFDs
or trade them end up losing money.
So you want to be familiar with what they are
and have a good understanding of them
before you trade CFDs on any platform like eToro.
So it goes without saying guys, CFDs should be considered
a pure speculation.
Personally, I would not recommend investing in them.
If you do decide to, make sure you do your research
and due diligence and have a good understanding
of derivatives and the type of risk involved
with that type of speculation.
But that being said, you are able to trade
ETFs, cryptos, forex, stocks, through CFDs
in over 60 countries through the eToro platform.
And then third and finally on the list here
we have a rapidly growing brokerage platform
from the United Kingdom known as DEGIRO.
Now, DEGIRO is a little bit different than eToro
because based on what country you are in,
in some cases you are buying the underlying stocks
themselves and in some countries you are buying
what is called the CFD, which we just discussed
with option number two.
So before you go out there and invest with DEGIRO,
you want to make sure you're actually purchasing
the underlying stocks if that's what you are aiming to do.
If you're comfortable with the risks associated
with CFDs, and you want to trade them,
that's entirely your decision.
Now DEGIRO participates with 18 different countries
right now, and each country has a country-specific
website, so if they do participate with your country,
I would definitely recommend clicking
on that country-specific website, doing some more research,
and understanding whether or not you are trading
actual stocks where you own the underlying asset
or are you simply trading the CFDs.
But anyways guys, those are three different
options you have in from of you
for investing in the U.S. stock market
when you're outside of the U.S.
And again, the reason why you can't just
open up a traditional brokerage account
with one of these mainstream U.S. brokerages
is because of issues with regulation
and primarily taxation.
But there's a couple of options there, obviously,
I would definitely recommend Firstrade
if you are in fact in one of those countries
they participate with, and the other two options there,
I would personally not get involved with CFDs,
but if you understand the risks involved
and you're comfortable with it, that's entirely up to you.
But thank you guys so much for watching this video,
I hope you enjoyed it, and I will see you in the next one.