Watch your currency conversion fees when buying US stocks outside the US market
When you focus on buying international stocks, you most likely start by looking for the platform that provides access to as many asset classes as possible, and with the widest range of options to choose from so that you may find the best possible investments for your strategy.
Another important factor to consider are the fees charged by the broker. Some brokers charge high fees, which can eat into your investment returns, while others shout about their zero-commission trade offers.
But when you see zero commission trading, you may want to consider whether zero commission actually means the implied free trading – or whether there are other fees lurking that make that proposition a bit more costly to your overall stock purchase. This is especially a concern with currency conversion fees for buying a US stock from anywhere outside the US market.
For non-US investors, the cost of investing in US stocks also includes fees for exchanging foreign currencies into USD to buy or sell those shares. This fee can make a big difference in the total cost of your stock purchase or sale, so it’s important to know how much each broker charges for currency conversion.
“International investors seeking exposure to U.S. stocks for portfolio diversification should be aware that zero commissions on U.S. stock trading as advertised by some brokers is anything but free,” said Steve Sanders, EVP of Marketing & Product Development at Interactive Brokers. “When FX conversion and other fees are factored into final transaction costs, select brokers charge significantly more than Interactive Brokers. Interactive Brokers offers investors the ability to trade U.S. stocks at some of the lowest costs in the industry without the added hassle of opening multiple brokerage accounts.”
Therefore, it becomes imperative to know how much each broker charges. And since the main goal of any investor is the highest-possible return, any money lost in relation to this can hurt a person’s overall return on investment.
Interactive Brokers keeps this fee low, with the currency conversion fee being as low as $2.00 or 0.02%, depending upon your market and your stock purchase. If you dive into other brokers’ fee structure, you may find their currency conversion fees can be a multiple of what IB charges. A recent chart published on Interactive Brokers site showed how several “zero commission” brokers were getting away with currency conversion fees between 5x and 10X those of IBKR’s minimal fee. All non-US investors should check their region’s IBKR site to see the potential savings according to their market.
It is important to find a broker that charges low fees so you can keep more of your investment returns. Interactive Brokers keeps currency conversion fees consistently low. In fact, fees at IBKR attend to be among the lowest in the industry, if not the lowest.
What makes the financial institution even more attractive on this front is their integrated account, where investors can have their capital in multiple currencies. This means investors can exchange money when they want to – and are ready – to buy shares or invest in an array of financial instruments.
Adding to this compelling argument is that IBKR also don’t charge for inactivity on the account. This means that an investor can sit on the sidelines for as long as required, waiting for THAT perfect opportunity to arise.
Nor does it require a minimum deposit when opening an account.
And with over 30 years of experience, Interactive Brokers has the experience and resources to help you grow your portfolio.
Interactive Brokers is the perfect choice for investors who are looking to take control of their finances and grow their portfolio. With low fees and a wide range of investment options, Interactive Brokers can help you reach your financial goals.
Get started today by opening an account here.