How to Buy US Shares From Australia

Taking up 60% of world stocks, the US stocks market is home to endless investing opportunities—no wonder everyone, including Aussies, wants a slice of the pie. 

Here is how to buy US shares from Australia, plus some handy tips and a list of the best brokers to help you get started.

How to Buy US Shares From Australia in Four Steps

The actual process of buying US stocks in Australia is not that different from investing on ASX.

Here are the steps you need to follow:

1. Find a broker that offers US stocks

There are quite a few brokers that you can use to trade on US markets and most of them charge 0% commission. (more on this below)

2. Open a share trading account

This is a pretty straightforward process that only requires sharing personal details, usually in an online application form.

3. Transfer funds into your account

Online brokers that offer US stock will only accept payments in USD which means you will have to deposit AUD into your account and pay a conversion fee to the broker. The exchange rate varies among brokers but typically ranges between 0.50% and 0.70%.

4. Research and start trading

Carefully analyse the market and select the shares you want to invest in. The US stock market has multiple exchanges with NYSE and NASDAQ being the biggest. NYSE is limited to blue chip companies, such as Citigroup, Berkshire Hathaway, UnitedHealth, and Visa, while NASDAQ is reserved for tech companies, including Tesla, Meta, Apple, and Amazon. 

Knowing a bit about exchanges though is nowhere near enough to get started in investing in US stocks from Australia—you will need to gain experience and knowledge before you can become a pro trader. If you are an absolute newbie, you should find a stock broker that is suitable for beginners or go for a platform like eToro that has a copy trading feature. 

Alternatively, you could give micro-investing a try—a lower-risk automated strategy that will help you dip your toes in the world of investing. 

Why Invest in US Stocks in Australia?

There are several reasons why the US stock market attracts investors from all over the world. 

1. Market capitalisation

The US market is the biggest, most liquid and most efficient in the world, making up almost 50% of stock market capitalisation. Just to compare—as of October 2022, the NYSE has a market capitalisation of USD$32.68 trillion, while the ASX has a market capitalisation of ​​$8.28 billion.

2. Invest in the biggest global companies  

The US stock market is also home to some of the biggest global companies, including Ford Motor Company, Procter & Gamble, American Express, Alphabet, Microsoft, Netflix and many more. Plus, the US stock market is truly global, giving you access to companies from other countries as well.

3. Portfolio diversification

When you invest in US stocks from Australia, you are not only taking advantage of trading opportunities that are not available on the ASX, but you also get a high level of diversification since you are investing in a wide range of companies. In other words, if one sector is underperforming, you could still get returns from another market. 

A diversified stock portfolio is also safer since your investment is spread out and you are not putting all your eggs in one basket, so to speak.

4. Innovation

More innovative companies are hitting the US market which means you can be at the forefront of emerging tech and get higher long-term returns. 

5. Fractional investing

Almost all brokers in Australia allow you to buy fractional shares, which is a portion of the stock. If you don’t have the funds to buy costly shares in some of the biggest companies like Amazon or Apple, investing in fractional shares can give you the same benefits but at a lower cost. 

6. Stable returns 

Last but not least, the US stock market has been the best-performing in the world for over a century. In fact, in the last ten years, Wall Street’s S&P 500 index has provided annual returns of 103%, while the S&P ASX 200 delivered 90% over the same time period. 

Where Can You Buy US Shares in Australia?

Invest in US stocks from Australia with the Big Four 

You can buy USA stocks in Australia by using the brokerage platforms of any of the four major ASX banks. Keep in mind that the fees are a bit steep, especially when compared to some trading apps that do not charge a commission. 

Here is a quick breakdown of the commission charged by the Big Four for investing in US stock from Australia. 

Trade size	CommSec	NAB	Westpac	ANZ
up to USD $5,000	USD $19.95	$14.95	$19.95	NA
up to USD $10,000	USD $29.95	$19.95 (up to USD$20,000)	USD $29.95	$59
above USD $10,000	0.31%	0.11% (over USD$20,000)	0.31%	0.59%

Buy American stocks in Australia with an online broker 

If you prefer to keep all your investments with one broker, you can consider opening an account with one of the following trading platforms.

1. eToro

One of the most popular trading apps in the world, eToro gives investors access to the biggest US markets with 0% commission and no monthly fees. The platform has a minimum deposit of $10 for buying international shares and charges a 0.5% currency conversion fee. 

2. Stake

Stake is an Australian-based trading app that provides access to over 6,000 US ETFs and stocks. Like eToro, Stake has no brokerage fees and has a 0.7% foreign exchange rate, which is fixed, i.e. you won’t have to pay a fee on every trade.

3. Superhero 

With Superhero you can start trading US stock and enjoy zero brokerage fees, a low exchange rate of 0.7% and the chance to earn extra Qantas points when trading. There are no monthly fees and you can invest with your company, trust or SMSF. 

4. CMC Markets

Besides being among the leading forex brokers, CMC Markets is a great option to buy US stock in Australia as it gives access to NYSE, and NASDAQ, and 13 other international markets. There are no brokerage or monthly fees, but a minimum deposit of AUD$1000 is required to get started. 

5. Selfwealth

Selfwealth is a reputable Australian-based company, listed on the ASX. The company offers a flat fee of USD$9.50 for international stock trades regardless of size which works out great for high-volume traders. There is also a currency conversion fee of just 0.6% but no management fees.

6. IG Share Trading

IG offers share and CFD trading with tight spreads and no brokerage fees for US stock. They require a low minimum investment of USD$10 and charge a 0.7% exchange fee. IG also has a wealth of educational resources to help beginners get started.

What Do You Need to Consider Before Investing in US Stocks From Australia?

1. How much does it cost to buy US shares?

Usually, brokers do not charge any commission on trades, however; there are other fees payable when you buy American stocks in Australia. These include transaction and conversion fees, which considering the AUD-USD fluctuating rate, could take up a huge chunk of your return. 

There are additional fees to consider as well—most brokers also have annual or monthly maintenance fees, as well as an inactivity charge if you have not traded in 6 months or a year. You need to carefully read the fine print before opening an account with a broker to avoid surprises and unplanned expenses down the line. 

2. Do you pay tax on US stocks in Australia?

If you own shares overseas you must pay tax on your income, including dividends and capital gains tax. 

However, you need to remember the following

• Australia and the US have a Double Tax Agreement, which means your dividends are taxed in the US. You still need to declare your foreign income to the ATO on your annual tax return, but you can then claim a foreign income tax offset for the tax you paid in the US and thus avoid double taxation. 
• Since shares are capital assets you will need to declare a capital gain or loss on your annual tax return and pay CGT if you make a profit from the sale of your international shares. If you already paid CGT in the US, you can claim a foreign income tax offset for the amount in Australia. 
• Traders who want to invest in US stocks from Australia need to have a valid W-8BEN-E (W-8) form (your broker will register you for one when you open an account). With this form, the IRS in the US will withhold 15% of dividends and no share of sales proceeds—without it, they will hold 30% of dividends and 30% of sales proceeds.

To avoid ending up on the wrong side of the ATO, it is best to talk to a tax expert who can advise you and help you file your taxes properly. 

Note: US shares are not subject to the Australian dividend imputation system, so you can’t get franking credits from US dividends.

3. What is your risk appetite?

Like all other investments, trading shares is risky and not suitable for everyone. If you have low-risk tolerance, look into ETFs instead.

ETFs are traded just like stocks, but the difference is that there are plenty of ETFs that track the US market, like the iShares S&P 500 ETF and the BetaShares Nasdaq 100 ETF, but are listed on the ASX. In other words, you won’t need to sign up for a share trading platform and you can trade on the ASX, minimising the risk of currency fluctuations and the dangers of investing in an unknown market. 

4. Market analysis

To be a successful trader you must follow market movements and trends. By doing your research and being aware of the risks involved, you can help maximise your chances of making a profit from investing in US stocks from Australia.

Luckily brokers for Aussie investors offer advanced charting and research options, as well as real-time news and updates allowing you to keep track of the market. However, bear in mind that more advanced features, such as market and limit orders, may come with a higher fee. 

5. What about the time difference?

Depending on where you live and which US exchange you are investing in there could be a huge time difference. This is why should look for a trading platform where you can set up alerts notifying you when the stock reaches a specific price point, although this feature is usually available with pro or premium accounts. 

6. What are the risks involved?

One of the biggest cons to trading US stock from Australia is the conversion fee leaving you exposed to currency fluctuations. And although this can lead to gains if the AUD is strong when you sell it, any profit you make could be offset by a falling Australian dollar. 

Another is a lack of knowledge and information. You may be familiar with big brands like Starbucks and Amazon, but in reality, you may not have the same level of understanding as you would of domestic companies. 

Bottom Line: How to Invest in American Stocks From Australia?

Buying US stock is not that different from trading on the ASX—cover all the basics, open an account with a broker, fund it and get started. That said, you would need to do the groundwork first, such as getting informed about trading hours, taxation rules and regulations, as well as choosing the right companies to put your money in. 

That’s why it might be best to consult a professional stockbroker or financial advisor who can not only guide you but also help you decide if investing in international shares is right for you. 

FAQs:

1. What can you trade with an international share trading account?

Usually, brokers give you access to several global markets, in addition to the US, such as the London Stock Exchange and the Toronto Stock Exchange, so you can diversify your investment across countries, companies and sectors. 

2. How do I open an international share trading account?

You can open an international share trading account with any online broker that offers international shares. You would typically be required to fill out an application form and fund your account (usually a minimum deposit of USD$10 is required). You might also be required to present some documents such as an ID for the verification process, which will ensure your account is protected. 

The procedure varies among brokers, but most of them have detailed guides on how to buy US shares from Australia and how to open an account, so you shouldn’t have any issues.