In this article we look at how you can buy and invest in US shares – like Apple, Amazon, and Tesla – in Australia. Not only that, we’ll also examine:
How to buy and invest in US stocks in Australia – in 3 simple steps
Investing in US shares has historically been both costly and time consuming for local investors. Without naming names, some brokers in Australia will still charge you AUD 29.95 just to buy a US stock.
With Syfe, we’ve streamlined the process of investing in US stocks – from account set up all the way to the investing itself. All Syfe clients get free monthly trades on US shares, plus, even after you’ve used your free monthly trades, brokerage on US stocks is just USD 1.49 per trade.
Here’s how you three steps to get started investing in US stocks with Syfe:
1. Create a Syfe account
Setting up a Syfe account takes less than 10 minutes. To get started, simply click here to download the Syfe app – either on the App Store or Google Play store.
Tip: to complete your Syfe account set up, you will need a few things at the ready, like basic personal information, a valid ID (passport, drivers license, or medicare card) and your TFN number.
By the way, with Syfe, you don’t need to fill out any additional forms to start investing in US stocks – it’s all part of our quick and easy onboarding process.
2. Deposit funds
With Syfe, you can start investing in your favourite US stocks & ETFs from as little as USD 1. To deposit funds into your Syfe account to kick off your investing journey, all you have to do is:
- Navigate to the ‘my funds’ section of the Syfe app and tap ‘add funds’
- Get your unique ‘Syfe account’ details – you should see an account name, BSB, and account number
- You can then add funds by transferring from your internet banking account into your Syfe account – with your ‘Syfe account’ details
The best bit? Fund transfers are instant - meaning you can start investing in US stocks, faster.
3. Choose what you’ll invest in
Once you’ve set up your account and deposited funds, to make your first investment in US stocks, all you have to do is:
- Open the Syfe app, tap on the magnifying glass on the top left hand of the screen and search for the stock you want to invest in
- Hit ‘Buy’ and choose your order type (quantity, dollars, or limit)
- Slide to buy, then tap ‘buy’ to confirm your order
- Congrats – you’ve made your first US investment!
Top 10 US shares to put on your watch list
The below table gives you an overview of the top 10 publicly listed US companies that you can invest in through Syfe. We’ve ordered this table from largest market value to lowest.
|Company||Ticker||Share price (USD)||Market value (USD)||5-year return||Analyst rating|
|Alphabet (Google)||GOOG||109.45||1.43 trillion||132%||Buy|
|Berkshire Hathaway||BRK.B||281.04||618 billion||60%||Hold|
|Johnson & Johnson||JNJ||164.4||431 billion||25%||Hold|
|Exxon Mobil||XOM||94.15||392 billion||19%||Hold|
|Meta Platforms (Facebook)||META||160.7||431 billion||-6%||Buy|
*Data correct as of 7 September, 2022.
Why invest in US stocks?
Now that you know how to invest in US stocks as well as some of the top US stocks out there, let’s take a look at some of the reasons why you might want to do just that.
Over the medium-term, US stocks (S&P 500, Nasdaq 100, Dow Jones Industrial Average) have significantly outperformed other global stock benchmark’s like Australia’s ASX 200, the United Kingdom’s FTSE 250, or Hong Kong’s Hang Seng. Check out the following 5-year returns comparison table to see what we mean:
US stocks vs global stocks
|S&P 500||Nasdaq 100||Dow Jones||ASX 200||FTSE 250||Hang Seng|
*Data correct as of 7 September, 2022
While past results can’t tell us what the future will look like, it gives us a good starting point for understanding how these things stack up.
Beyond returns, diversification is a key reason why it might be beneficial for an Australian investor to invest in US stocks.
According to Fidelity – one of the largest asset managers in the world – diversification is important because it ‘can help mitigate the risk and volatility in your portfolio, potentially reducing the number and severity of stomach-churning ups and downs’.
We discuss diversification in more depth as part of our Constructing a diversified portfolio – 5 tips for 2022 article.
Let’s say you’re only invested in ASX stocks. Geographically, this can be great when Australia’s economy is doing well – when the Aussie dollar is high (AUD), when there’s lots of consumer confidence, or when we’re exporting lots of minerals like iron ore or coal.
But let’s say the Australian economy starts to do less well – maybe Chinese demand for our iron ore falls, maybe demand for the Aussie dollar declines. Just as stocks might benefit when the economy is running smoothly, the opposite can happen when things aren’t going so well. If you’re only invested in ASX stocks – if you’re not diversified – as Fidelity warns, you might not be protected against potential ‘stomach-churning ups and downs’.
The Australian share market is incredibly top heavy. What this really means is that investing in Australia, means investing in the banks (think CBA, ANZ, NAB) and the miners (FMG, BHP, Rio Tinto). Those two sectors alone make up close to 50% of the ASX 200!
Check out the following sector breakdown:
Source: Market Index
Lack of diversification can potentially be a good thing – when certain sectors are performing well. The key term here is ‘when’. For example, iron ore miner Fortescue Metals Group has seen its share price rise 171% in the last 5-years, as iron ore prices have also risen to multi-year highs. But ask yourself: what happens when the price of iron ore reverses?
Compare Australia’s ASX 200 to the broad-based S&P 500 – which is made up of the 500 largest companies in the US. While the S&P 500 certainly has a bias towards tech – making up 27.3% of the index, it is more evenly diversified across the board. Check out the following sector breakdown:
Source: S&P Global
The power of secular trends
Let’s get a little technical: The other thing worth understanding about Australian stocks is that they tend to be more cyclical than US stocks.
By that we mean they are more sensitive to certain macroeconomic cycles – the miners are sensitive to changes in commodity prices (like iron ore) and the banks are sensitive to changes in interest rates. Like we said above – those two sectors alone make up close to 50% of the Australian stock market.
By comparison, US stocks – especially US tech stocks and healthcare stocks – which like the miners and the banks of Australia, make up a large portion of their share markets – are less cyclical.
Apple benefits from the continued adoption of smartphones, Alphabet (parent of Google) the rise of and proliferation of the internet, and Amazon the shift from bricks-and-mortar to e-commerce.
These trends – unlike the price of iron ore for example – are likely to continue trending up, regardless of what’s happening more broadly in the global economy. They aren’t cyclical, in technical terms: they are secular.
Innovation is driven by people, not companies. One explanation for the outperformance of US shares over the last five years – compared to regions like Hong Kong or the United Kingdom – is superior talent.
Talent comes in many shapes and forms: from software geniuses like Mark Zuckerberg, design visionaries like the late Steve Jobs, or laser-focused CEOs like Frank Slootman (who isn’t actually an American by the way).
Talented individuals and groups are what allow great companies to maintain their competitive advantage(s) and potentially deliver superior investment returns to their shareholders. This is also why you’ll often see articles from news outlets fretting over the implications of ‘brain drain’ – that is, talent loss from a company or country.
This article/webinar is brought to you by Syfe Australia Pty Ltd., CAR number 1295306 of Sanlam Private Wealth Pty Ltd (AFSL 337927). Disclaimer: Investing involves risk including the risk of losing your invested amount. We do not provide personalised advice or recommendations. Any information we provide is general advice and current at the time written. Please speak to your Financial or Tax adviser for personal advice. Any reference to an investment’s past or potential performance is not an indication of any specific outcome or profit. Data in article correct as of July 12, 2022.