How to buy international stocks in Canada?
For many investors, buying foreign stocks allows them to diversify by spreading out their risk, in addition to giving them exposure to the growth of other economies. High-quality stocks on global stock markets are a great way to diversify your portfolio. Many financial advisors consider foreign stocks a healthy addition to an investment portfolio. They recommend a 5% to 10% allocation for conservative investors, and up to 25% for aggressive investors.
As a Canadian, a simple way to gain exposure in the global stock market while lowering your risk is to invest in U.S. stocks. Over the last decade, the S&P 500 index returned over 14%, while the TSX only managed 6.9% growth in the same time period. That’s because many blue-chip U.S. stocks have operations in many countries. This will let them benefit from a rebounding global economy, as well as a return to prosperity in the U.S.
Another option is to buy shares in an international-focused exchange-traded fund (ETF). ETFs can track foreign economies, or they can track the performance of numerous international companies. You don’t have to handpick the companies yourself, as your ETF manager does the work for you, and you can typically buy shares through your brokerage. Prominent ETF providers include iShares by BlackRock, State Street Global Advisors, Vanguard, FlexShares, Charles Schwab, Direxion, First Trust, Guggenheim Investments, Invesco, WisdomTree, and VanEck.
Best international brokerage accounts for Canadians
Investing in foreign markets is a lot like investing in the Canadian market, however you’ll need to find an online broker with access to international exchanges. You can access International stock exchanges like the NYSE, NASDAQ, LSE and many others using Canadian trading platforms like Questrade, Wealthsimple, Scotia iTRADE. The other option is to open a global account with a broker in your home country, such as Fidelity, E*TRADE, Charles Schwab, and Interactive Brokers.
Wealthsimple — Best for inexperienced traders
Scotia iTRADE — Best for international markets (inc. US)
Interactive Brokers — Best for experienced traders
Investors need also to be wary of fraudulent brokers not registered with regulators in their market, such as the Securities and Exchange Commission (SEC) in the U.S.
How to buy stocks without a broker?
It is possible to buy stocks directly from companies like Coca-Cola through direct stock purchase plans (DSPPs).
