UK investors can easily buy US stocks from within the UK but it can be a little confusing when starting out – this helpful guide explains how it works and clears up any misunderstandings.
Can I invest in US stocks from the UK?
Yes, it is entirely possible to buy US stocks from the UK. Non-US citizens are entitled to buy US stocks. While the laws that govern US stock markets are American, you do not need to be an American to invest in them. For example, you can be British and invest in America by buying US stocks. The same applies to other investments like US government bonds or corporate bonds, as well as US property.
The US stock market is the largest in the world and potentially offers some of the most popular stocks to trade. For foreigners, investing in the US also has the benefit of diversification, giving you ‘global market exposure’ to your investment portfolio,although bear in mind that trading is risky and may not be appropriate for everyone.
Can I buy US stocks in the UK?
You don’t need to open a US brokerage account to buy US stocks. UK banks and brokers offer accounts in which British residents can buy US stocks and other financial instruments.
LCG offers trading in thousands of US stocks and ETFs listed on the New York Stock Exchange, Nasdaq and BATS with a low commission of just 2-4 cents per share.This can all be done from the ease of the LCG app or desktop trading platform.
Some of the most popular stocks to buy on the New York Stock Exchange and Nasdaq tend to be the largest.
Here are the top 10 US stocks by market cap:
| Rank | Name | Ticker | Market Cap | Price(on 9/9/2021) |
| 1 | Apple | AAPL | $2.574 T | $155.73 |
| 2 | Microsoft | MSFT | $2.262 T | $301.03 |
| 3 | Alphabet (Google) | GOOG | $1.921 T | $2,895 |
| 4 | Amazon | AMZN | $1.793 T | $3,542 |
| 5 | FB | $1.065 T | $377.74 | |
| 6 | Tesla | TSLA | $760.58 B | $759.24 |
| 7 | Berkshire Hathaway | BRK-A | $631.16 B | $419,810 |
| 8 | NVIDIA | NVDA | $559.75 B | $224.62 |
| 9 | Visa | V | $501.48 B | $228.53 |
| 10 | JPMorgan Chase | JPM | $476.28 B | $159.39 |
Source: Companiesmarketcap.com
An alternative for Brits to buy US equities is to invest in an index like the S&P 500 or Dow Jones Industrial Average. This can be done by buying a US index fund, index ETF or indices CFDs.
NOTE: Pink sheets and US small cap stocks tend to have very low liquidity, potentially can be volatile and considered as high-risk investments and are not suitable investments for most investors and tend not to be available through large UK Brokers. Additionally when buying stocks denominated in currencies other than your home/base currency, you will be exposed to exchange rate risk.
Can I buy US stocks in pound or euros?
Yes, all modern trading platforms and investing apps will offer the ability to deposit in one currency and convert it into foreign currency like US dollars to buy foreign stocks. Once the trade is closed, the US dollars can then be converted back into GBP directly through the investing app. This of course also means you are exposed to exchange rate risk.
Investing in US stocks therefore offers the opportunity and risk for investors to be exposed to currency fluctuations. If you are long a US stock, and the US dollar depreciates against the pound, your US stock will be worth even less to you, even if the share price did not go down. Also be aware that there is a physical currency conversion charge to be paid when investing in physical shares, and following and converting currencies can become confusing.
On an LCG spread betting account all trades on all markets, including US shares, are denominated in GBP, keeping it simple for the user.
Watch this video to see the ease at which a trade is made in the LCG app.
Can I invest directly in US stocks?
You might be wondering How can I buy US stocks from oversea’s? Remember that in the digital age, shareholders will typically not have a physical copy of their share certificates. You can own the stocks, while the bank or broker takes custody of the certificates, either physically or digitally, and charges you a nominal quarterly fee for doing so (this process is called dematerialisation).
There are two options to consider when investing in stocks fromthe US. Taking ownership of the stocks directly – or using CFDs for speculation and avoiding direct ownership.
Read this blog on CFDs vs stocks to understand more about the differences between the two and which might be right for your investing journey.
Do Residents of the UK pay tax on US stock trading?
Always one of the biggest considerations for investing is what tax will be owed on any earnings. Naturally a concern for Brits investing in the US is the possibility of double taxation. Thankfully this is not the case.
As a so-called ‘non-resident alien’ i.e. a non-US citizen who doesn’t live in the United States, you would not be obligated to pay US capital gains tax – this would be paid in your home country of the UK. And if you open a spread betting account, there is not even any UK capital gains tax on your returns (subject to you being a UK resident for tax purposes).
However, even as a non-US citizen, Brits will be obliged to pay dividend tax – just like Americans. But don’t worry, this happens automatically. Every time a company pays you a dividend for owning their stock, the UK bank or broker will withhold the necessary tax and pay you the rest.
*** Note: LCG do not offer tax advice, taxes are subject to individual circumstances and are subject to change. Please consult your tax professional. Additionally, LCG are not investment advisers, therefore if you need an opinion on whether our products are appropriate, or suitable for your existing investment strategy, then you will need to speak to an independent advisory investment broker.
US stock market trading hours in BST (British Summer Time)
If you are investing in US stocks in the UK, one consideration will be the time difference and Stock Exchange opening/closing hours. When investing while residing in the UK time zone (GMT), you will not be able to buy or sell US stocks in the morning, only in the afternoon and evening due to the time difference…. Why watch TV when you can invest!
9:30 AM to 4 PM Eastern time (ET) on weekdays (except stock market holidays)
When do US stock markets open and close in UK time?
3:30 PM to 10 PM British Summer Time (Opens at 14:30 GMT+1 and closes at 21:00 GMT+1)
(GMT – Greenwich Mean Time) during winter (November to April) and (BST – British Summer Time) when its ‘Daylight Saving’ Time (May to October)
How to open a trading account to trade in the NYSE & Nasdaq
How to start trading? There are some simple steps you can take to trade in US stocks from the UK:
- Go to LCG.com
- Open a trading account (all LCG accounts have access to US stocks)
- Fund the account
- Research US stocks to buy (using the analysis section)
- Place the trade
Spread betting and CFD trading carry a high level of risk to your capital and can result in loss of your deposits. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Please note that 69% of our retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing money.
The information provided within this communication has been prepared by London Capital Group Limited (LCG) and is intended for informative purposes only. It is not intended for investment, or commercial advice or an offer or solicitation for the purchase or sale of any financial instrument. Any opinions, news, research, analysis, prices, other information or links to third-party contained within this communication is provided as general market commentary and does not constitute investment advice and is not intended for any form of commercial use. LCG shall not accept liability for any loss, damager including, but without limitation, to any loss or profit which may arise directly or indirectly from use of or reliance on such information.
The information in this article is not directed at residents of EU as well as Australia, Belgium, Canada, New Zealand, Singapore or the United States, and is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.
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