Shares of foreign companies, especially American ones, can bring a return of 5-7% per year. But to buy shares of foreign companies, you need to open an account with a foreign broker.
Description of the problem
To get a license on an American exchange, an investor must pass a lot of checks. It can take a long time (up to three months), a lot of documents will be required, and getting a license is paid. But without a license, the broker will not work with you.
Also, a foreign broker will charge a commission of 6% on each purchase. At the same time, the size of the minimum transaction is 10,000 dollars (sales from 1,000 UAH). Small investors cannot trade this way, and the 6% commission is huge.
But the broker can give a forecast, explain how to buy shares of foreign companies and other details. Although opening an account is an extremely difficult task.
Alternative methods of buying shares
Ukraine’s policy of integration into the Western bloc countries leads to the fact that the population is interested in shares of technological foreign companies. Investing in shares can bring passive income, which is relevant for a country where the population is getting poorer due to armed conflict.
In Ukraine, you can buy shares on the stock market, but some banks allow you to buy them in their applications. For example, in the mobile application of Alfa-Bank you can buy Apple shares. To buy shares without a foreign account, you just need to open an account with that bank and that’s it.
This is convenient, although there are some risks. The Ukrainian National Commission may revoke the license of companies that may be connected with the Russian Federation. For example, Freedom Finance simply had its license suspended due to sanctions imposed by the National Security and Defense Council.
Investments through local brokers
Shares of many S&P 500 companies (e.g. giants like Apple, Microsoft, Tesla, etc.) were brought to Ukraine back in 2019. Banks are not the only places where you can buy shares. Shares can be bought through local brokers, not only foreign ones. Even if it’s investing in the technology sector, or buying treasury bills.
Buying stocks without a foreign account is possible, and you don’t need alternative and illegal methods to buy stocks. But choosing a broker is important, as the broker is the intermediary between the buyer and the seller. The broker should be on the official list of the stock exchange, have a license and a high percentage of transactions (90%+).
Investment funds and ETFs
You can buy shares in Ukraine through investment funds (IF).
An IF is a fund where investors buy shares with collective funds. All those who invested become co-owners of the companies. ETFs are often used to invest in Apple and Tesla.
An ETF fund is an exchange traded fund that engages in exchange-traded investments, buys shares of companies, splits them into pieces (into hundreds or thousands of pieces, units) and resells them. In this way even small investors can buy a piece of stock without collectively pooling. This is an excellent way to diversify your portfolio.
The risk of this method is that the initial unit price is formed from the asset price. But the unit price can fall while the asset price remains unchanged. However, ETF funds have action mechanisms to return the price of the units, in case their price rises or falls.
Buying shares through stock exchanges
Where to buy shares in Ukraine is clear – on funds and stock exchanges. But how to buy shares in Ukraine? The method does not depend on what country you buy shares in, what you invest in, the growth of Apple and Tesla shares, whether your investments in the technology sector or not. You can simply open an account with Alfa Bank to buy shares. Or start on the stock exchange, where shares are plentiful and liquidity is high, due to the fact that stock exchanges are designed for trading.
How to buy Apple shares through Ukrainian brokers:
- The client chooses a broker remotely or directly on the stock exchange.
- The client tells the broker what company shares he wants to buy.
- The broker tells about the market price of the stock, etc.
- The broker and the client fix the terms of the future transaction: the number of shares to be bought, their price, amount, etc.
- After the conclusion and clarification of all details (the time in this conversation is not stipulated in any case), the broker puts the deal.
- The seller of the stock finds the deal and writes to the broker to agree to the terms.
- After the deal goes through, the seller gets the money, the customer gets the stock, and the broker gets the commission.
Broker’s commission – from 0.2%, you will have to pay 200 UAH for opening an investment account and 500 UAH per year for its maintenance (information from Kinto exchange).
But the disadvantage is that if on the next day after the conclusion of the deal the price of shares grows even by 1-2%, your chances of its fulfillment will fall. And vice versa, if the price falls – the deal will be concluded, but you will buy a share at an inflated price.
If you bought a share and its price falls – you can sell it to an ETF fund and immediately invest in cryptocurrency through our service “AnyExchange“, so as not to be exposed to inflation. We do not suggest you to invest your entire portfolio in Bitcoin, you can transfer a part of it into tokens that have a stable price and are pegged to the US dollar. For example USDT or USDC, and then seamlessly exchange for cash.
If you make a deal on an ETF, you simply buy portions of stocks from the entire basket. For example, you invest in Apple and Tesla, pay a commission and that’s pretty much it. The plus side of this method is that the deal is done quickly, while in the other case you have to wait until you find a seller.
Recommendations and strategies
If you are a novice investor and you don’t have a few extra tens of thousands of dollars – you can trade on the Ukrainian stock exchange or through ETF funds. There you can buy several parts of different stocks and just wait for their price to rise, and its changes are daily. This is not as risky as trading whole shares. At best it will bring you profits and at worst it will bring you experience and small losses. We advise you to monitor events in the macroeconomic world, watch where big investors are investing. For example, Ilon Musk bought shares of Twitter in 2022, which raised the share price of the social network.
But if you are already an experienced investor, you should go to the Ukrainian stock exchange. Even if 10,000 dollars is not a serious amount for you, the 6% commission will definitely be tangible. However, if you are interested in companies whose shares are not traded in Ukraine – open an account with a foreign broker. We have no right to discourage you and advise you how to buy shares better. We will only advise you to always diversify your finances not only in shares, but also in currencies. This will reduce the risk with the same prospects.
Our service “AnyExchange” will help you transfer funds into cryptocurrency and then into foreign currencies. USDT and USDC will be at your complete disposal. In addition, their price refers to the dollar 1:1. If Ukraine prohibits the purchase of foreign currency, these restrictions do not apply to the purchase of crypto. We are in favor of financial freedom and will be happy to help you.
When choosing a financial strategy for yourself as an investor you should only rely on your goals and thoughts.
Conclusion
Investing in foreign stocks generates returns in the long run. You don’t have to be the biggest investor to make a profit. Even if you want to buy a lot of shares of trillionaire companies like Apple or Tesla, there is no need to open an account with a foreign broker, go through a lot of checks and pay a huge commission. Instead, you can buy shares on stock exchanges, IF Ukraine or on some banks’ apps.
