Ever since I started investing, there have been a number of stocks which have caught my eye across the pond.
However, I was reticent to dive into foreign stock ownership. It was all just a little more complicated and expensive.
As I have discussed previously, foreign exchange charges at my broker are not only delivered at the point of purchase but also levied on the dividend income as well.
At 1.5% this is not a small amount. Not being able to hold foreign currency in my brokerage account means that this could become--potentially--an expensive enterprise over the number of years I plan to invest for.
Eventually, I will likely yield and look to add some North American stock to my portfolio. However, whether or not it will be directly through individual shares on a US exchange or through a London-listed Investment Trust or ETF I do not yet know.
However, with the possibility of buying and holding US shares directly and over the long term I have started to investigate the best method by which to do this.
US Brokers Open to UK residentsAs part of this, I have sought to find some US discount brokers who accept foreign residents as customers. The idea would be to hold US equities in this account and UK ones in my UK account.
Another possibility (perhaps more straightforward) would be to open another UK-based brokerage account which is more international investment friendly. But this is a post for another day.
(NB: This information is a work in progress. If you know of or discover any additional brokers--discount or otherwise--who accept UK-resident investors please do comment below or contact me by another method. I will happily update this creating a dynamic record of the options available to UK (and indeed other foreign) investors!)
So far, I have only found five brokers who explicitly state that they are willing to accept investors from overseas. Here they are with their statements--in their own words--regarding foreign customers:
- ChoiceTrade--"I am a foreign citizen, is it possible to open an account with ChoiceTrade? Yes, foreign citizens may establish accounts with ChoiceTrade. You may print out the new account form from our Forms Download page or submit a request online for an application to be mailed to you. All foreign citizens are required to complete a W-8BEN Form, which is available on our Forms Download page. Additionally, all foreign citizens who do not have U.S. resident alien (green card) status must submit a photocopy of the identification page (this photocopy must contain a photo of the applicant) of their passport or other government-issued ID. If you are a legal resident of the United States you are not required to complete the W-8BEN Form. For more information regarding foreign citizenship status, please visit the Internal Revenue Service and read the Tax Information for Aliens and U.S. Citizens Living Abroad, specifically Publication 519."
- eOption--"eOption requires a low minimum initial requirement to open an International account. We accept unsolicited accounts from non-U.S. residents from...the United Kingdom (England, Northern Ireland, Scotland and Wales). Cash accounts can be opened with a minimum of $5,000.00 in any combination of US Dollars and/or US/foreign exchange traded securities."
- FirstTrade--"Can a foreign resident open a Firstrade account? Yes. Although, all funds must be deposited in U.S. Dollars. All Foreign Account Applications MUST include a W8-BEN Form and Online Service Agreement.... A copy of your valid passport (photo and signature pages) is required for all foreign residents."
- Just2Trade--"Can I open an account as a non-U.S. citizen? Yes, you may open an account as a non-U.S. citizen who is not residing in the U.S. In addition to the required account application documents, you will need to submit a copy of your unexpired passport and a W-8 BEN Form. Certain foreign accounts may be limited to certain offerings (i.e. no margin)."
- LowTrades--"Can I open an account with LowTrades if I am a resident of a foreign country? Non U.S. citizens or resident can open an account by simply filling out the proper forms noted on our site. However, Success Trade Securities is currently not registered to operate in Canada and cannot accommodate accounts for Canadian residents at this time."
So which offers the better deal? Here I have a little table for you breaking down some of the key things:
|Trade||Min. Account||DRIP||Account Fees||Inactivity Fees|
|ChoiceTrade||$5||None||No (?)||None||$20 per quarter (charged if account is worth less than £50,000 and fewer than 5 trades are done per quarter)|
|eOption||$3||$5,000||Yes (Free)||None||$50 annually (charged if fewer than 2 trades occurred in last 12 months or if there is less than $10,000 in credit or debit balances)|
|FirstTrade||$6.95||None||Yes (Free)||None||$19.95 per year (charged if no trades have occurred in last 24 months and equity value is below $2,000)|
|Just2Trade||$2.50||$2,500||Yes (Free)||None||None (?)|
|LowTrades||$4.95||None||Yes (Free)||None||$50 per 6 months (charged if no trade has occurred during the trading periods, Jan-Jun and Jul-Dec).|
Other US Brokers (Quietly) Open to UK residents?
My post on my foreign transaction broker's fees did result in an interesting post from There's Value:
I too have opened a foreign account with TradeKing for US, and am considering Lynx for Euro... but can't really justify the Euro one yet, until I have much more to invest. TradeKing makes sense as it's dirt cheap and allows foreign nationals to have an account.This is interesting as it raises the prospect that, actually, many US brokers accept foreign account holders but without making this clear. Certainly, TradeKing's site does state that:
All customers including US citizens must be living in the USA to maintain a TradeKing account.There's Value has since added that since opening an account with TradeKing the company has undergone a merger which may have affected its policies.
However, I wonder whether anyone else has had experiences in which they have opened accounts (from the UK or the rest of Europe) with US brokers who do not specifically state they do or indeed explicitly state they don't.
Can you help?
Of course, this is a relatively tiny number of brokers included above. I searched many, but these were the only discount brokers I found which explicitly stated they accept foreigner held accounts.
You may be able to help me build on this:
- Do you know any more discount brokers which accept non-US investor accounts?
- Have you had any experience with these brokers above? What was your opinion of them (positive or negative)?
- What about non-discount US brokers which accept UK-resident customers?
- Thinking beyond the US, do you know any European accounts which accept UK investors as account holders?
- Also, of course, if you discover any of this information is incorrect, please do inform me. I want it to be as accurate and up-to-date as possible. However, I must stress that I do not and cannot claim that all this information is 100% correct.
I hope some of your found it useful.
[Creative Commons image reproduced from Flickr user Skippy]
Why not also follow me on Twitter and like me on Facebook?