You might have just gotten your head around investing in locally listed shares, or maybe you’ve got a bunch of Exchange Traded Funds in your portfolio already, and you’re thinking… US shares!? Is that something I should be thinking about too? It might be, or maybe it doesn’t make sense for where you’re at in your investment journey, but we’re all about giving you the info so you can make the call. Here are some of the reasons you may want to consider investing in US stocks.
The addition of international equities to a portfolio is exciting for a lot of people because it gives them access to some of the biggest companies in the world; like Facebook, Amazon, Netflix and many more. Think McDonalds, Johnson & Johnson, Coca-Cola… these are household names that so many of us have grown up with and use everyday, so being able to invest in them means more opportunity to capitalize on global market trends (like the tech boom), and further our loyalty to these brands as shareholders.
Some people are cautious about US stocks because of currency fluctuations, but that works both ways. Exchange rates can potentially offer an investor, additional opportunities to make a return on their investment because they are not only getting the potential benefit of the share’s growth, they are also getting the potential benefit of the Rand weakening or Dollar strengthening in value and thus, an increase in the value of their overall investment as well. Here’s an example of how that might work:
This is just an example, and isn’t based on any actual performances on the share or currency we’re using.
You convert your Rands to dollars using EasyFX and invest $10 into Facebook Shares. Let’s say that at the time you transferred your Rands into Dollars, that $10 amount equated to R145.
Over time the value of those Facebook shares increases by 10% and your investment is now worth $11, which would equate to R159.50 at your initial exchange rate. In addition, the Dollar strengthened by 15%. That means you’re investment would now be worth R183 because of the growth in the value of your shares (R15), as well as the increase in value of the Dollar (+-R24).
Diversification is an investing principle a lot of people use in their portfolios to manage the risk of their investments and to give them exposure to different profit making opportunities. Another way to expand your options is by using your USD account to access even more companies. A lot of companies which are listed in the US are actually global brands, and so you have the opportunity to diversify even further. For example; Canopy Growth Corporation is a Canadian Cannabis company which is listed on the New York Stock Exchange and is available to invest in using the EasyEquities USD Account.
Managed US Portfolios
Though there are probably a lot of US company names you might recognize and want to invest in, you might feel like a lot of other investors do and not feel comfortable creating a US portfolio on your own. If this is the case, you also have the option of investing in a managed US portfolio (Bundle), which you as the investor would own and have sight of, but would be managed by a professional or asset manager.