How to Start Investing in Global Trading?

There are two simple ways to start investing in the US stock market: one is to use a foreign broker, and the other is to use a local broker that provides facilities for trading foreign stocks. Most brokers can assist you in opening a CDS account when you open a trading account.

Using an International Broker

One way to purchase foreign stocks is to open a trading account with an international broker that allows you to buy foreign stocks. For example, you can open a nominee account with a broker that will assist you in trading foreign stocks.

A nominee account is a type of account where a stockbroker holds stocks belonging to the client, making trading stocks easier. With a nominee account, the broker holds the stocks for you, but you retain ownership since you pay the brokerage fees.

Using a Local Broker

Another way to purchase foreign stocks is to open a global trading account associated with local investment banks and securities firms in Malaysia. This way, your funds are invested overseas but the assets are located locally. Most Malaysians opt to use local brokers for trading as it offers more convenient deposit and withdrawal options.

What is the Minimum Budget?

If you want to invest in the US stock market, you need to have sufficient funds first. Before starting investing, you should have at least $200 (800 Malaysian Ringgit) to $1,000 (4,000 Malaysian Ringgit) prepared. If your initial capital is less than $1,000 (4,000 Malaysian Ringgit), you can start by purchasing one stock and gradually increase your position over time.

If your initial capital is limited, some brokers may allow you to purchase fractional shares. Additionally, in the US, you can buy just one stock. However, in Malaysia, investors need to purchase at least 1 lot of stocks, equivalent to 100 shares.

However, avoid investing money in stocks that you need immediate cash access to. Furthermore, it's advisable for new investors not to take on significant risks beyond their financial capacity to avoid jeopardizing their overall financial situation.

As a new trader, you need to choose the right online trading platform or broker. Using the wrong broker could significantly impact your investment returns.

There are many stockbrokers in Malaysia offering trading in the US stock market. Therefore, you need to research which stockbroker suits your investment situation best.

Why Invest in the US Stock Market?

Capital Appreciation

One of the primary benefits of investing in the US stock market is the potential for capital appreciation. Over time, the stock market tends to appreciate due to the relative value of its currency compared to the Malaysian Ringgit. Additionally, there is greater global demand for US stocks, which ultimately presents money-making opportunities.

Diversification

Investing in the US stock market allows for diversification. Since the political and economic environments in the US differ from Malaysia, when the Malaysian stock market underperforms, investors still have exposure to US stocks to mitigate risk. US stocks also increase portfolio diversification and offer the potential for significant and rapid returns, helping to avoid overly risky or conservative investment strategies.

Growth Opportunities

Many of the world's largest companies are based in the US or in broader markets like China for good reason. These countries offer much larger market sizes, providing companies with extensive growth opportunities. As most Malaysian companies are limited in their local growth prospects, the US stock market provides more opportunities for growth.

Conclusion

As an investor, finding ways to diversify your investment portfolio is crucial. Investing in the US stock market not only helps you achieve this goal but also enables you to gain more profits. However, before starting, remember to equip yourself with the right trading knowledge and choose the appropriate broker to minimize investment risks and losses.