It sounds simple enough these days to purchase an Apple or a Tesla from Kuala Lumpur. One click of an application, your ringgit switched to dollars and technically, you are now a shareholder in an American company. However, ease of execution is never the problem people face.
Time zones will destroy your sleep.
In Malaysia, US stocks begin and end trading us stock market education approximately between 9:30 pm and 4:00 am, adjusted according to seasonal changes. If you intend to trade and transact actively as opposed to just invest long-term and check in occasionally, then prepare to put yourself on truly grueling schedules. So many traders burnout within a few months of starting because they failed to comprehend the rigor of these working hours.
Currency conversion is never free.
The process of converting ringgit to US dollars is inherently accompanied by some expense; in the form of a margin when exchange rates are calculated and occasionally direct conversion fees. When a high frequency of conversion processes takes place, the costs steadily erode your overall investment returns. Certain traders make a mistake of overlooking brokers offering rates higher than their rivals and the simple comparison saves them quite a bit of money in the long run.
Tax implications on dividends-withholding tax does exist.
By default, the United States levies a 30% withholding tax on any dividends payable to non-residents of America, and Malaysians happen to fall within this category, although this tax rate could possibly be lower if a tax treaty between Malaysia and the United States exists. Most beginners unaware of this complication only learn of it when their first payment of dividend received is lower than expected and by then, further action is futile.
Fractional shares have boosted accessibility significantly.
The previous necessity for a substantial capital investment in the US stock market to allow one to partake in highly valued stocks, for example, the likes of Amazon, has become almost obsolete. As many Malaysian investors are now able to access this feature through an app where one is capable of investing their desired capital, for example RM100.
Quarterly earnings reporting- volatile and rapidly changing.
With potential share price fluctuations reaching 10-15% in a solitary session during the quarterly earnings report phase, those unaccustomed to Bursa Malaysia might fail to prepare oneself for the volatilities of the US stock market.
Broker regulations-these are applicable in Malaysia as well.
Although you are placing orders for stocks in the United States, it does not assure the intermediary broker that you utilize has proper regulations in place. It is important to confirm that your brokerage platform has the authorization for the services and products being provided.
The global ripples effect of US political influence-Fed rates and etc.
Interest rate changes announced by the Federal Reserve and political developments in America cause fluctuations throughout the globe, irrespective of whether the Malaysian investor follows American politics or not-hence influencing those holding US stocks. It is imprudent to neglect global macroeconomics in this particular scenario.