Investing in the Stock market - Buying shares in US businesses

MercilessKiller

Hi There,

I have some money in a spare account that's not doing much these days and I've been thinking about investing in the stock market. The company I'm looking to invest in is a US company so the shares are in $'s and I'm not sure how to go about it as I've never done this type of thing before.

I have a basic amount of knowledge of the market such as the obvious things of how share prices work, how much it costs etc etc. Though actually going about finding a broker to process the transactions I have never really researched, so thought this would be a good place to ask!

The company I'm thinking of investing in is a well known company who had their worst 2011 but announced new partnerships and have optimistic plans for the next year or so, thus it would be a bit of a speculative play. I'm not looking at investing a huge amount.. 4 figures at the lower end of the scale type thing.

If anyone can provide some advice as a starting point to businesses I could go to in order to buy the stock in the US company easily enough that would be great! Thanks

One that I've seen is the Motley Fool offering:
http://www.fool.com/shop/newsletters/19/f62e9dc5-46cc-4b5f-ba0b-4ac4d1dd0418.aspx

There are 2 options, the 2nd seems to be an ISA free from capital gains tax, with a flat £17 charge for an international investment. Is this worth it?

JoeCrystal

Well, if you want to buy American shares, then you would have to do it outside ISA unless it is dual listed on AIM as well.

Cheers

Joe

MercilessKiller

Thanks Joe - Could you provide more advice as to how it works. Would I just sign up to some broker website, select my shares, enter card details and job done?

It seems Halifax offer £11.75 per transaction + FX so not sure if that works out cheaper than £17.50 per transaction either. I have 4 accounts with Halifax so that might make it easier to get it setup I guess?

lvader

JoeCrystal wrote: »

Well, if you want to buy American shares, then you would have to do it outside ISA unless it is dual listed on AIM as well.

Cheers

Joe

I've invested in quite a few US shares that don't have any UK listing inside an ISA.

MercilessKiller

So how does capital gains tax affect shares?

Lets say I invest 1000 shares in a $1 a share company. Would the tax affect my investment, or only when I sell the shares? If I have it within an ISA, does that mean that the shares are effectively what's in the ISA rather than the cash, and when I sell the shares it would be returned to my normal account?

Cheers

JoeCrystal

lvader wrote: »

I've invested in quite a few US shares that don't have any UK listing inside an ISA.

Really? (Went off to do some quick research and came back) Well, in this case, lvader is correct. I generally invest in AIM, paying little thoughts to Main Market. All I know about International shares within AIM is the fact they have to be dual listed. My knowledge is clearly not good enough for this.

Sorry about that.

Cheers

Joe

bigfreddiel

JoeCrystal wrote: »

Well, if you want to buy American shares, then you would have to do it outside ISA unless it is dual listed on AIM as well.

Cheers

Joe

you can gain exposure to us equities quite easily via etfs within an isa

fj

gkerr4

just check that your execution only stock broker actually allows you to deal in US stocks before you sign-up. i use https://www.iii.co.uk for US investing - they charge a couple quid more for US stocks (£15/transaction - v.s £10 for UK stocks)

other things to note - i'm not sure if you can put US stocks in an ISA, but beware that even if you do, the US feder govt will tax the income from dividends and it will be paid net of this tax. They won't come after you for capital gains though, that would be a UK tax payable on the profits of shares sold - but there is a £10k allowance before you start paying this tax.

I find US shares easier to track that UK - there is more information on them and the US has been better at informing the private investor than UK companies. websites like CNBC.com are excellent - and I love the jim cramer podcast 'mad money' from CNBC. good luck

Aegis

JoeCrystal wrote: »

Really? (Went off to do some quick research and came back) Well, in this case, lvader is correct. I generally invest in AIM, paying little thoughts to Main Market. All I know about International shares within AIM is the fact they have to be dual listed. My knowledge is clearly not good enough for this.

Sorry about that.

Cheers

Joe

The confusion is fairly understandable in this instance. If you want to invest in AIM shares, they have to be dual listed on a main exchange elsewhere. It's that main exchange listing that makes them ISA eligible, not their AIM status.

MercilessKiller

gkerr4 wrote: »

just check that your execution only stock broker actually allows you to deal in US stocks before you sign-up. i use https://www.iii.co.uk for US investing - they charge a couple quid more for US stocks (£15/transaction - v.s £10 for UK stocks)

other things to note - i'm not sure if you can put US stocks in an ISA, but beware that even if you do, the US feder govt will tax the income from dividends and it will be paid net of this tax. They won't come after you for capital gains though, that would be a UK tax payable on the profits of shares sold - but there is a £10k allowance before you start paying this tax.

I find US shares easier to track that UK - there is more information on them and the US has been better at informing the private investor than UK companies. websites like CNBC.com are excellent - and I love the jim cramer podcast 'mad money' from CNBC. good luck

Thanks for this - Very interesting.

I'll definitely look to invest in the US shares through an ISA account as I'm looking to invest around £2kish in stock where the price is around $5 a share so it would seem to make sense to do that.

Another newbie question, I'm assuming it's the original £2k investment that's part of the ISA so regardless of how the stock is doing, I could invest a further £3k (bearing in mind I have a cash ISA full)

Thanks

MercilessKiller

Also another question, when I try and open an account at iii I get asked:
Would you like to open an ISA account?
Would you like to open a Trading Account account?

I already have a cash ISA with Halifax but want to use a trading ISA for the other 5.3k - Would that mean I select yes here or is this referring to a cash ISA? I think this is a stupid question and the answer should obviously be yes, but I also thought I best check!