A look at how to invest in US stocks in Malaysia: pros and cons of different options

The New York Stock Exchange and NASDAQ are globally recognized stock exchanges that offer substantial opportunities for individuals to steadily grow their wealth. For Malaysian investors, exploring foreign equities can bring numerous advantages. One significant benefit is the diversification it offers to your investment portfolio, along with the ability to manage currency fluctuations. Consequently, investing in US stocks presents a valuable avenue to diversify and expand an investment portfolio in Malaysia, regardless of your level of experience in investing. Traders Union analysts provided an explanation on how to invest in US stocks within Malaysia.

Investment in US stocks from Malaysia

Can Malaysians invest in US stocks? — Absolutely! So, how to invest in US stocks in Malaysia? TU experts say there are two main options.

International Stock Brokers

Malaysian investors can utilize international stock brokers, which allow them to buy and sell stocks globally. It is recommended to choose a reputable international broker with good customer service, strong security measures, affordable pricing, useful educational resources, and access to desired markets. Conduct thorough research to ensure you understand the costs involved before selecting the best international broker.

Pros:

  • Increased accessibility to a wide range of stocks.
  • Access to other important markets (EU, UK, etc.).
  • Lower fees.
  • No capital gains tax.

Cons:

  • Generally not locally regulated.
  • 30% dividend tax.
  • Higher risks.

Local Brokers with US Connections

Some Malaysian stockbrokers have connections to US stock brokers, allowing investors to set up international trading accounts. However, these accounts may have limitations on available investment vehicles or the number of trades. Consider the brokerage fees and currency conversion costs, as they can make investing expensive. Familiarize yourself with all costs before opening an account.

Pros:

  • Locally regulated.
  • No tax on capital gains.
  • Lower risk.

Cons:

  • Higher brokerage fees.
  • Stocks are limited in variety.
  • Some cases may not allow multiple foreign currencies.

TU experts summed up that Malaysians have options to invest in US stocks, either through international stock brokers or local brokers with US connections. Each option has its own pros and cons, so carefully evaluate them based on your specific investment goals and preferences.

What is the optimal investment amount?

When considering investing in the US stock market, the initial capital requirement is crucial. The minimum budget needed to begin investing is at least 221.85 MYR, which is typically enough to purchase 1-2 lower-priced shares. However, the specific minimum threshold may vary depending on the chosen broker. Analysts at Traders Union recommend to prioritize systematic investment rather than solely focusing on the initial investment amount for achieving desired outcomes.

How do I start trading US stocks in Malaysia?

Analysts at TU provided a step-by-step guide for those who want  to open an online investment account with a broker:

  • Choose a regulated broker that aligns with your investment goals.
  • Submit proof of identity and address through the broker’s app or email.
  • Select the desired base currency for your account, considering that changing it later may be challenging.
  • After the broker approves the account, deposit funds using various methods like credit cards, bank transfers, or eWallets. It’s advisable to utilize the broker’s demo account or simulator to test the platform before depositing real money.
  • Once deposits are made, you can commence trading US stocks in Malaysia.

Is there a tax on stock trading in Malaysia?

Traders Union analysts say that you are not obligated to pay capital gains tax on investment sales in Malaysia. The tax system exempts capital assets, and the Malaysian Income Tax Act of 1967 explicitly states that profits or gains from stock sales due to price increases are not subject to taxation.

Conclusion

According to experts at TU Malaysian investors have the opportunity to explore and invest in US stocks through international or local brokers. Both options have their advantages and disadvantages, so it’s important to carefully consider factors such as accessibility, fees, regulation, and available investment options.

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