- Investment strategies
- Why invest in the stock market?
- Buy and hold or technical analysis? Why you need an investment plan
- Value investing and short selling in volatile markets
- Using technical analysis to support value investing
- Investing in the unexpected
- Franking credits, explained
- What is dividend stripping and is it a sensible strategy?
- Investing in quality IPOs
- How to invest in stocks that benefit from a moving Australian dollar
- Reasons to avoid bonds when interest rates are low
- How value investors use Skaffold
- Quality, growth and value = a winning strategy
- Know your investor type and boost your performance
- Technical + fundamental analysis = better buy and sell decisions
- Fundamental investing
- Value investing and the price earnings ratio
- Intrinsic valuation models and methodology
- Value investments or value traps?
- How to find value stocks in a bull market
- Find value investments in expanding markets
- Why capital raisings struggle to add investment value
- How to value an insurance company
- Top stocks
- 5 qualities of top stocks
- How to find stocks with a competitive advantage
- Why return on equity is the best measure of business performance
- Using cash flow to find value investments
- Finding high quality dividend stocks
- Debt is not always a dirty word
- Why Skaffold share investment software makes sense
- Using economic factors to uncover the best investment options
- How do experts find top stocks to invest in?
- Investing in global stocks
- How to invest in international shares on global stock markets
- Benefits of investing in international shares
How to invest in international shares on global stock markets
It’s never been easier to invest in some of the world’s largest and most profitable businesses.
With value stocks in the Australian share market becoming decidedly harder to find, there’s never been a more compelling argument for dipping your toes into global equity markets offering greater potential for growth, plus portfolio exposure to a broader range of class-leading businesses.
What you need to get started investing in global stocks
It’s never been easier to diversify your portfolio through overseas exchanges. Organisations that offer international broking accounts include: CommSec, St George, E*trade Australia, Westpac, Halifax Investment Services, Interactive Brokers, Saxo Capital Markets and HC Securities.
Opening an account with a global stockbroker is no more difficult than opening a bank account, and buying international stocks is no more difficult than buying Australian ones.
Once you’ve provided personal details, including tax file number, and are issued with a certificate of foreign status for tax purposes, you can proceed to either:
A. open an account with a broker or
B. nominate an existing account from which funds for trades can be deducted.
Then you’re pretty much good to go. Purchase orders can be made either online or over the phone. If you’re buying shares in A$ you should ask when and how currency conversion takes place, and if there’s a fee involved. Similarly, if a cash account needs to be set up, check whether interest is paid and what other features are available, including the reporting of foreign currency interest for Australian tax purposes.
Your nominated broker will provide you with access to a certain number of offshore stocks based on their partnering arrangements with foreign exchanges. For example, while CommSec and Westpac Online Investing allows online trading for US stocks only, Sonray Capital Markets and GET Financial provide access to around 20 exchanges.
To differentiate their services from those of bigger counterparts, smaller brokers can offer you (the trader) direct access to those exchanges. This puts you squarely in the hot seat, but remember if you choose to side-step an intermediary, you’re effectively trading in real-time and are solely responsible for the stocks you buy and sell.
Tax considerations for international investing
Whether you’re buying direct international shares individually or via a self managed super fund (SMSF), remember that they’re still subject to tax in Australia (assuming you’re an Australian resident). So if the shares pay a dividend and had imputation credits (foreign tax credits) attached to those dividends, then these credits could be used by your (SMSF) fund to offset Australian tax up to the Australian tax liability amount. While you will also be subject to capital gains tax (CGT) – this will only occur on the sale of your foreign shares.
ETFs as an alternative to direct shares
Direct international shares aside, you can also get access to global stocks via ETFs (exchange traded funds) like iShares, issued by Barclays, or an international index fund, like those offered by Vanguard or BlackRock. These have become attractive low-cost alternatives to fund managers that charge higher management fees for the privilege of investing in an international share fund on your behalf.
Then there are (international) ASX-listed investment companies (iLICs) like Magellan Flagship Fund and Templeton Global Growth Fund, which are vehicles for getting exposure to inexpensive international assets. But be warned, to achieve decent returns from iLICs you need to buy them at a significant discount to their net tangible assets (NTA), to offset the weighty management fees that iLICs tend to charge.
Equally important, if you favour international share funds or iLICs over direct shares, remember that past performance is no indicator of what these investments may do in the future.
If you plan to buy direct international shares, Skaffold Global filters into key global markets like the US, Canada, Hong Kong, Singapore, the UK, Europe and Switzerland. Skaffold Global can be used to take the guesswork out of identifying top rating global stocks.