How to buy foreign stocks - get good returns

 Returns on the foreign stocks have in the recent times far exceeded those of the domestic stocks. The reason is simple that foreign stocks of the emerging markets like India, China, Brazil and Russia are those of the best performing companies of those countries and these countries have good growth rates and these economies are growing at faster pace than the US economy. Good growth rates mean more consumers and demand and that in turn means that stocks have delivered good returns. 

In fact the emerging markets mutual funds have been doing great as they simply invest in stocks in the foreign markets. 

It is very simple to invest in the stocks of the foreign markets either directly or indirectly. Let us talk about direct investment. The first step is to open up an account with a share broker and the start trading in shares of the foreign companies. Now for selecting a broker make sure that you select a broker which is a discount broker which will mean any online broker like Ameritrade or Sharebuilder or E-trade. After opening the account make sure that you have researched the names of the companies which are foreign companies and are listed either in NASDAQ or in the NYSE. The NYSE definitely has much more stringent listing requirements than the NASDAQ. These companies will issues shares in the American market and are called as American Depository receipts or the Global depository receipts. These receipts represent the underlying shares being traded in the foreign country.  You can trade these shares as if you are trading the normal shares of any US listed  domestic company.

 You can also trade in international ETF like the iShares MSCI EAFE index fund. This fund will help you gain access to all the international equity markets and that helps without you putting in any more effort into buying foreign stocks individually. Another route to go is to trade in country specific ETF. You can pick a Japan ETF or an India ETF or a China ETF.  Now a good way is to make sure that you have foreign exchange risk covered else you can have your returns go down. The best way is to make sure that you have only a portion of your portfolio invested in select international stocks. 

Foreign stock exchanges

Some online brokers are already operating in various stock markets and have license to trade in the foreign stock exchanges. These have in fact made sure that you as an American investor can trade in foreign exchanges as if you are trading in a domestic exchange. The there are several foreign stock brokers who can help you trade in foreign markets. These markets have had good amount of bull run in the recent times and have delivered returns which are in the range of 20-30%. Imagine what would have happened to your money had you diversified to foreign stocks. Another good option is the foreign market mutual funds or the special international mutual funds based on a sector. 

With global economy become more and more integrated there is simply no choice but to invest in stocks which are not domestic but foreign  to make sure that you take advantage of the great returns that foreign stocks give. Also you can check the foreign stocks nyse list to find out what are the returns compared to domestic stocks. Invest via a good broker and you will never be disappointed and in fact chance are that you will earn better than your domestic counter parts. Happy investing in foreign stocks.