Benefits and Risk Factors of Investing in US Shares from New Zealand

US sharemarket offers some of the biggest companies like Facebook, Alphabet, Microsoft, Nike, and Bank of America for investors to purchase and sell shares. Once can expect endless options in the US sharemarket while investing. On the other side, the NZX does not offer enough good investment options apart from Auckland Airport, Spark and Fletcher Building, and Air New Zealand. This makes most NZ investors head to the US share market to make reasonable investments. Today, several investment platforms offer New Zealanders to make profitable investments in the US sharemarket. These platforms compete vigorously to help provide the best service while charging minimum fees. While they offer several benefits to trade with NZ dollars, there are also a few risk factors one should keep in mind.

Benefits of investing in the US sharemarket

Wide range of investments

The NZX sharemarket of New Zealand offers around 200 companies for investors. The limited options for the investors make it difficult for them to make smart choices. There are small companies that get listed over time, but they do not do much. US market, on the other hand, offers 3,500 companies and ETFs. It creates a wide range of opportunities for traders to learn and grow their profits.

Small to no fees on investments

Most of the platforms that offer investment options for NZ dollar charge minimum to no fees. The e-brokers earn from the spread in the currency exchange and sharemarket. This helps the investors in New Zealand get complete access without wasting any money. Before 2018, the US share market was expensive and difficult to access from other countries. Today the online trading platforms have made it easier for investors in New Zealand. While most of the trades are free, some platforms like Stake offer additional features for a minimum fee.

Risks of investing in the US sharemarket

The Exchange rates can fluctuate

If the NZ dollar rates fluctuate and go higher than the US dollar, your investments in the share market can be worthless when you invest from New Zealand. This means that upon investing NZ$1000 when the NZD: USD is 0.60 and withdrawing it at a 0.75 rate, your returns will be NZD$200 less.

The US sharemarket has different timings

The NZX50 opens from 10 am to 4:30 pm in New Zealand, which makes it easy for local traders to invest during the day. On the other hand, the US sharemarket opens from 2 am to 10 am in New Zealand. It means that you will need to manage your time accordingly.

Observing the US market is difficult from New Zealand

Staying in the US can provide better insight for the US share market and its companies. Investors from New Zealand can feel disconnected from the US sharemarket. That is why it is important for New Zealand Traders to find a platform that can provide them the best options without them having to check for the market condition directly.