Should I buy Canadian or US stocks from Canada?

Are you looking for a way to invest in the US stock market but don’t know how to go about it? The Canadian day trading platform is the best option for you. Let’s face it, the United States stock market is the place to be. 

Although Canadian stock market is full of great opportunities for many investment strategies, the US stock market is the global gold standard. It is also an important tool to diversify your portfolio, making it an enticing strategy for many Canadians. 

Unfortunately, many Canadians do not know the benefits of investing in the US stock market. In this blog, we will discuss the benefits of trading in US stocks from Canada and walk you through the process. Continue reading if you intend to take advantage of the higher returns the US stocks have historically generated.

Buying US stock from Canada

Investing in US stocks from Canada is easy and inexpensive. Also, many online trading platforms give Canadians access to major international stock exchanges. These include the New York Stock Exchange and the NASDAQ. These platforms allow Canadians to buy stocks in companies like Meta Platforms (Facebook), Netflix, or Tesla. 

However, not all trading platforms available in Canada offer access to US stocks. Therefore, it is important to check which countries and exchanges are accessible and what fees are before signing up for a new account or a broker. 

The easiest way to buy US stock in Canada is through online stock trading platforms. Although each platform works differently, they have general rules when it comes to buying Canadian shares. The brokerage fees can be a percentage of the value of the trade or a fixed amount. The foreign exchange fees also vary. So, choose brokers that offer USD accounts. These avoid paying to exchange CAD for USD every time you want to make a trade.

Stocks to buy in the US stock market 

There are many stocks available in the US stock market. From Exchange Traded Funds and Mutual Funds to Apple, Microsoft, and Google. Canadians can invest in any stock they like. There are, however, several rules and laws in both the United States and Canada. These can make the process far more difficult than you think. So do thorough research to understand the potential costs beforehand.

The advantage of buying US stock in Canada

Access to a larger pool of investment 

One of the advantages of buying US stocks from Canada is that it gives you access to a much larger pool of investment opportunities.  This is because the Canadian stock market is overshadowed by the sheer size and scope of the US market, thou the Canadian stock market is also home to many companies.

Has potential for long-term gain 

Investing in the US stock market helps improve your chances of making money over long periods. Diversifying your holdings across sectors like manufacturing, Resources and Commodities, Consumer, Finance, and Utilities. in the United States provide long-term gain no matter what happens in the market. This is because when the stock of one sector is going down, others are increasing. Over time, other stocks will also rise, helping you to gain more in the long run.

Promote portfolio diversification 

Investing in different sectors in the US stocks from Canada is an excellent way to diversify your portfolio. Having US assets alongside your Canadian stocks mitigates risk and balances out any loss associated with investing in a single country’s market. That means you can rely on your Canadian stocks when the US picks start slowing down.

Internal exposure 

The US stocks provide all the foreign exposure you need. But this also comes with some risks, especially for new investors. Also, timely and accurate information about the companies is not always available, and securities regulations vary widely between countries. Tax rules and restrictions between nations can also add unnecessary costs.

Better performance

The US stocks have a history of performing better than the Canadian stock market. Over the last decade, the performance of large US stocks generated an average annualised return of around 14%, while large Canadian stocks only generated about 12%. Although. This performance does not guarantee future returns when investing in stocks, it shows the potential gains of buying US stocks.

Wrapping up 

Purchasing Canadian stocks, and US stocks in Canada is a good way to benefit from both stock markets. It will allow you to diversify your portfolio, maximise your investment gains, and tap into a highly profitable market.