The US stock market isn’t just a financial playground—it’s the Olympics of investing, where companies like Apple, Amazon, and Tesla compete for gold. From Wall Street’s buzzing traders to armchair investors halfway across the world, everyone wants a piece of the action. But why? Because US stocks have a history of offering significant growth potential, though they also come with risks. The US market, known for its innovation, stability, and global influence, continues to attract investors seeking long-term opportunities. Read more to buy US stocks in Australia!
Why invest in US stocks
First, let’s explore why investing in US stocks matters. We take a look at three key areas to help you understand what opportunities US stocks offer.
Superior capitalisation
The US stock market’s capitalisation accounts for 60% of the global equity market, totalling $55.2 trillion.[1] This massive scale reflects the market’s depth and ability to accommodate large investments. While high capitalisation doesn’t guarantee stability, it does provide a robust foundation for investors. Additionally, the sheer size of the market allows for a wide range of companies to list, from innovative startups to well-established giants. This diversity creates ample opportunities for investors to find value within US stocks.
Enhanced liquidity
Liquidity is a crucial factor for investors, and US stocks excel in this area. The US equity markets are highly liquid, thanks to the participation of institutional investors, retail traders, and advanced algorithmic trading systems. Multiple trading venues and electronic platforms further enhance liquidity, resulting in tight bid-ask spreads and lower transaction costs. This makes it easier for investors to enter and exit positions without significantly impacting prices. For short-term traders, this means quicker execution, while long-term investors benefit from smoother portfolio adjustments.
Broader diversification
Investing in US stocks opens the door to diversification across a wide range of sectors. The US market is home to industry leaders like Apple and Microsoft in technology, and Johnson & Johnson in healthcare, among many others. This variety allows investors to build portfolios that spread risk across different economic sectors. By doing so, they can reduce the impact of sector-specific downturns and take advantage of growth opportunities in various parts of the economy.
How to start investing
After understanding why US stocks attract so many investors, you might be eager to jump in. Here’s how you can get started:
1. Choose a reliable brokerage
The first step is to select a reliable brokerage platform. Look for one that offers low fees, a user-friendly interface, and access to a wide range of stocks and investment tools. Make sure the broker is regulated and provides strong customer support.
2. Research each stock
Before investing, take time to research the stocks you’re interested in. Look at the company’s financial health, growth potential, and industry trends. Tools like earnings reports, analyst ratings, and news updates can provide valuable insights. Remember, informed decisions are key to successful investing!
3. Choose how many shares to buy
Decide how much you want to invest in each stock. If the stock price is high, consider fractional shares—this allows you to buy a portion of a share rather than the whole thing. This is a great way to diversify your portfolio without needing a large amount of capital.
4. Decide the order type
When placing a trade, you’ll need to choose an order type. A market order buys or sells the stock immediately at the current price, while a limit order lets you set a specific price at which you want to buy or sell.
5. Review your stock portfolio
Once you’ve made your investments, regularly review your portfolio to ensure it aligns with your goals. Monitor performance, rebalance if necessary, and stay updated on market trends. Investing is a long-term journey, so patience and consistency are key!
Why choose Tiger Trade for investing in the US?
At Tiger Trade, we provide Australian investors with a seamless platform for investing in US stocks. Here’s why our online stock brokerage is the right choice:
Access to major US stock exchanges: Invest in companies listed on the NYSE, NASDAQ, and AMEX, ensuring a broad selection of stocks and ETFs.
Auto-invest feature: Schedule regular investments in US stocks and ETFs starting from as low as USD 2. This auto-invest feature enables dollar-cost averaging and helps mitigate market volatility risks.
Competitive fees & real-time data: Benefit from cost-effective brokerage fees and free real-time quotes to make informed investment decisions.
24/5 trading availability: Trade US stocks with extended market hours, providing more investment opportunities without the need to stay up late.
User-friendly platform: Our intuitive interface, analytical tools, and real-time financial news cater to both beginners and experienced investors.
Easily investing in the S&P 500 from Australia: Interested in how to invest in the S&P 500 from Australia? Tiger Trade offers a straightforward way to invest in this iconic index. Through ETFs or index funds, you can gain exposure to the top 500 companies in the US, all from the comfort of your home in Australia.
Start trading
As global companies are listed on the US market, investing in US stocks helps diversify investors’ portfolios. Tiger Brokers provides a seamless trading experience, and with Tiger Trade’s comprehensive smart stock filters, targeted searches with split-second results are all in the palm of your hand. However, it's important to remember that every investment comes with its own risks! Stay informed and invest wisely.
References
[1] Countries with the largest stock markets globally 2023. Available at: https://www.statista.com/statistics/710680/global-stock-markets-by-country/ (Accessed: December 23, 2024)
Disclaimer : Capital at risk. See FSG, risk disclosures, PDS, TMD and T&Cs via our website before trading. Information provided may contain general advice without taking into account your objectives, financial situations or needs. Tiger Brokers (AU) Pty Limited ABN 12 007 268 386 AFSL 300767
