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Investing In The Stock Market: How To Buy Stocks In Foreign Countries

June 14th, 2013 , Last Modified: June 14th, 2013
Buying blue chip or penny stocks in the local stock market is much easier than buying stocks in the foreign market.

Buying blue chip or penny stocks in the local stock market is much easier than buying stocks in the foreign market. The key to making a profit by taking advantage of the double digit growth in foreign stock markets lies in being well informed. Information about stocks in other countries may not be as readily available as that of the domestic market. Therefore, you need to study foreign markets carefully before investing your money.

Market Regulators

Each country has a stock market regulator like the SEC, FSA and CySEC among others. Before you invest in any foreign market, it is critical that you familiarize yourself with the rules and regulations set by these regulators. For instance, some countries have a special tax rate on foreign withdrawals of dividends and profits. These rules are meant to encourage investors to keep investing in the market as opposed to remitting funds to their home countries.

There are some brokers who can help you to invest in foreign markets. However, these brokers only have access to a limited number of stocks. If you want full access to shares listed on foreign stock exchanges, the best thing for you to do is to open your own trading account with brokerage firms in these countries.

Potential Challenges

There are some minor setbacks of investing in stocks trading in a foreign stock exchange. For instance, language barriers may prevent you from accessing information in a timely manner. Fluctuations in the value of the local currency might also have a big impact on the net worth of your investment. Investors must therefore consider all the pros and cons of investing in a foreign stock market in order to make an informed decision.

Mutual Funds and ETFs

Investing in the stocks or any other type of financial instrument is risky, and most people know this. However, there are some investment options that are less risky. For instance, ETFs and mutual funds guarantee a certain return within a given period. Exchange Traded Funds or ETFs and mutual funds are normally managed by professionals. They are therefore subject to little or not risk at all. They are some of the best investment options for investors who are interested in the high returns offered by foreign stock markets, but are risk averse.


When a company, whether foreign or domestic, pays a dividend, the money is only subject to withholding tax, which is final. Most countries normally charge an average of 15 percent tax on dividends. Transaction fees will however vary from broker to broker, so identifying the best broker to work with is very important.

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