Investments in the American stock market

The Russian market of investment products offers an impressive number of depositing options. However, not every investor agrees to limit his/her horizons with territorial opportunities of his/her homeland. This is the source of my today’s article. Why don’t we try to expend the frames of deposit diversification with object from the American market for private investors? This country has been picked not by chance: besides the variety of offered alternatives for making investments, the USA encourages active and successful non-residents with special benefits. Now I will tell you how to enter a foreign investment platform and adjust to it quite fast…

I’d like to note from the start that the American investment market has its own nuances, and before you decide to pick out some part of your budget for this direction, you have to learn attentively all details. It’s true that an investor feels safe and partly secured in America. Several organizations – The U. S. Security and Exchange Commission (SEC), The National Association of Securities Dealers (NASD) and The Securities Investor Protection Corporation (SIPC) – watch out that all processes in this sphere are regulated. In case your involvement into the target market is successful, you may be sure that each authority will see to observance of your rights. But let’s sort everything out in order.

1. Account opening via a broker

I would not work on the foreign investment arena on my own, that’s why the first step is the choice of a reliable broker. The guarantee of the fact that your money will be compensated upon any conditions is the right choice of a brokerage firm. According to the U. S. laws, all legal brokers have to provide open statistics, have a legal status, possess all necessary details and certificates (you can look it up on this site).

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Brokerage structures can be of the following kinds:

    an American affiliate of a Russian (or any other) company a Russian (or any other) office of an American company an American Internet broker

For instance, a representative of an American broker in your country helps an investor make an application for an account opening in the U. S. cleaning house and sends documents to the main office. However, it’s an investor who deals with money transfers to the currency account abroad. It’s convenient as an investor can always ask his/her wealth consultant anything he/she needs to clarify and get an answer in his/her native language. If you choose an American Internet broker (etrade. com, ameritrade. com, etc.), you should be self-reliant and should have a strong command of English.

1.1. Account types

As a rule, an American broker offers you several account types: pension, trust, individual, marginal ones and others. Depending on the frequency with which you are going to sign deals, you have to choose either an individual one or a marginal type (>4 deals per week). And in the last case your minimum irreducible account balance should be about $25 000.

1.2. The list of necessary attributes for account opening

As I’ve said, the first document a broker requests from you is an application. An author indicates an account type and investment tools he/she wants to work with (stocks, options and others). Then he/she needs to provide his/her level of income and a financial estimation of personal available capital. Also, he/she is required to fill in the line with experience on the stock market and aims of his/her future activity. An average sum to gain a broker’s “support” must be at least $10 000.

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And remember that if you open an account, you become a taxpayer of two countries (you must fill in the W-8 form). If all documents are accepted, you will receive the notification on a successful account opening. Take this notification and visit your tax office to have a confirmation sign stamped. You are obliged to send it an income declaration every year.

2. How to replenish your opened account

It’s quite easy: grab the confirmed notification and go to a bank to have funds from your currency account transferred to the cleaning house account.

3. How to control a broker’s work

Since a broker works as a trading mediator, you have a full right to be interested in what he/she does and check received bank statements and confirmations about completed deals. That’s why there are two communication paths, i. e. by phone/e-mail and by entering the trading platform through a broker’s channel. If you discover some discrepancies in documents you receive and broker’s reports, don’t worry. Either SIPC or a state regulator in the stock market issues will solve this question.

4. How to withdraw money from your account

You need to send an application to your broker in which you choose bank wire transfer. Within 1-2 weeks the requested sum will be sent to your account in your bank (brokers collect fees for withdrawals from the system too).

5. The list of investor’s expenses

Everything has to be reimbursed, and this case is no exception. A certain amount of fees (it is set by a broker’s structure) will be levied for all conveniences and comfort provided to an investor. It includes payments for:

    a broker’s work itself (even if deals are completely sparsely, fees are still imposed) – obligatory the participation of third parties in deals (regulators are paid too) – obligatory an access to a broker’s trading platform – optional a place in a broker’s client hall – optional financial reports and analytic reviews on the stock market – optional.
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One more obligatory point is income tax payments. In this issue, Russian and U. S. authorities have distributed the amount of received money in such a way:

    income tax received due to the increase in price for stocks is sent only to the Russian tax policy income tax for received dividends is directed only to the U. S. tax administration fund.

6. When is a wealth manager of help?

If an investor knows peculiarities of the stock market, I doubt that he/she will need consultant services. And a novice is a different story, as he/she will find this help to the point. Cooperation with a specialist will let you feel not alone online, get timely information about the market condition, gain experience/increase capital and save time. That’s the range of services offered by contemporary wealth consultants.

In the end, I’d like to say that Fortune favors the bold, so never be afraid to take chances. Moreover, risks are minimal once a skillful approach is taken. Good luck in your business!

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