Investing on international exchanges - Please Advise

GSouth

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Joined
Jan 21, 2016
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13
So, I am already investing through Easy Equities both locally and in USD, but I have my eye on a stock that's only listed on the London Stock Exchange.

Any advice out there as to the best route to take to invest on international stock exchanges?

Some considerations:
  1. Will be investing for long term, not trading.
  2. Will be a relatively small account to start off with (± R 100 000 in total, but not all in one stock).
  3. Costs, especially ongoing (monthly/annual costs), must obviously be as low as possible.
  4. If I can get one platform that can give access to multiple global stock exchanges that will be a bonus.
I have read up a little bit about PSG's offshore share trading account and Etrade's brokerage accounts.
It seems like local brokers will be easier, albeit more expensive and with larger minimum investment amounts.
Brokerages abroad, on the other hand, seem to be difficult to get into if I do not have an international bank account, and there's also a lot of paperwork and hoops to jump through.
Still not sure whether it would be best to approach it with local brokerages or just go directly offshore.

Then there's also the admin/red tape/paperwork discussion (SARS et al.), not sure exactly what the process is, how to get it started, or how difficult it is to go through.

Any advice would be much appreciated.

Thanks in advanced!


Edit:
So I seem unable to edit or delete the topic of my previous thread which has an error. If anyone can tell me how I would appreciate that too.
 

rvZA

Senior Member
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Jan 3, 2021
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735
I have opened two accounts with TDAmeritrade. I have both a personal and business account. There are no opening fees, nor do they charge any trading fees when buying or selling shares. I have a cash account with them, so I am not limited with day trading should I ever decide to go that route.

Unfortunately, you are mostly restricted to the US, but there are foreign country businesses listed there in which you could invest should you wish to do so.

I have registered a US Business, applied for a company tax number (EIN) and also for my own personal tax number (ITIN). All my future investments will now be in my company name there. I will file and pay taxes there and also when I withdraw my investments.
 

Tim_vb

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Nov 7, 2008
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476
True, but I' don't mind as I execute probably 6 trades a year. eToro and friends probably charge as much you won't know as its in the bid/ask spread. running a brokerage costs big $$ and I want to see how they make their money.

Also investing via a non SA registered exchange is asking for headaches
 

JayM

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Oct 30, 2005
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3,032
I have opened two accounts with TDAmeritrade. I have both a personal and business account. There are no opening fees, nor do they charge any trading fees when buying or selling shares. I have a cash account with them, so I am not limited with day trading should I ever decide to go that route.

Unfortunately, you are mostly restricted to the US, but there are foreign country businesses listed there in which you could invest should you wish to do so.

I have registered a US Business, applied for a company tax number (EIN) and also for my own personal tax number (ITIN). All my future investments will now be in my company name there. I will file and pay taxes there and also when I withdraw my investments.

You are in for a world of pain in terms of tax.
 

cguy

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Jan 2, 2013
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Not really. The business has nothing to do with SA. US partner runs day to day. But, we will see what happens.
It sounds as though you are turning dividend tax into something that will now require business tax and then personal income tax as well to get into your hands, or am I mistaken? Also if you’re in SA, your income from salary withdrawn will be taxed at SA income tax rates.
 

rvZA

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It sounds as though you are turning dividend tax into something that will now require business tax and then personal income tax as well to get into your hands, or am I mistaken? Also if you’re in SA, your income from salary withdrawn will be taxed at SA income tax rates.

I do have a LLC registered in the US and all business activities are run from there through the company. My investments in the US is also done in the name of the company and forms part of my income. The LLC is a passthrough entity, which means all business profit and losses passes through to me as a member of the LLC for tax purposes. So, in short, I am taxed in the US on my personal income tax. This business of mine has absolutely nothing to do with South Africa, it is a total seperate entity, run by my partner in the US, even though I am a member of the LLC.

I do have my own business in SA too, where I do report my normal business income to SARS. Any money I do generate from abroad and bring to South Africa, I also do report to SARS. But, as for the rest of the LLC, everything operates in the US, from the US and capital stays inside the US, even though I am a non-resident tax payer in the USA.
 

cguy

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I do have a LLC registered in the US and all business activities are run from there through the company. My investments in the US is also done in the name of the company and forms part of my income. The LLC is a passthrough entity, which means all business profit and losses passes through to me as a member of the LLC for tax purposes. So, in short, I am taxed in the US on my personal income tax. This business of mine has absolutely nothing to do with South Africa, it is a total seperate entity, run by my partner in the US, even though I am a member of the LLC.

I do have my own business in SA too, where I do report my normal business income to SARS. Any money I do generate from abroad and bring to South Africa, I also do report to SARS. But, as for the rest of the LLC, everything operates in the US, from the US and capital stays inside the US, even though I am a non-resident tax payer in the USA.
Ah, ok. If you can this to run as a passthrough, there shouldn't be any double taxation, although I do wonder if there is any advantage to this? One more point though, is that in another thread you wrote: "All my withdrawals will stay in my US business bank account, and if money is ever needed locally, I will simply pay myself a salary which I will then report locally as income.". I believe that if you do this, salary won't be eligible for passthrough. It's either all passthrough, or all Business tax + Personal Income Tax (so, (a) double taxation, and (b) potentially taxed at a higher rate than dividends or Capital Gains).
 

GSouth

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Jan 21, 2016
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13
Hey Guys, thanks for all the suggestions so far.

Having checked out some of the proposals, eToro is looking like an attractive option.

Seems they changed their system a few years ago and now allow you to hold the underlying asset (incl. fractional shares like Easy Equities), and they also pay out the dividends of the shares you hold.
I also like the fact that it will give me access to more instruments.

From all the sources I can find, it looks like they do not charge any fees or spreads when buying or selling shares (unlike CFDs), and only charge a $5 withdrawal fee.

Is there anything I am missing?
 

rvZA

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From all the sources I can find, it looks like they do not charge any fees or spreads when buying or selling shares (unlike CFDs), and only charge a $5 withdrawal fee.

Is there anything I am missing?

There is a $50 minimum amount you need to spend when buying shares.
 

GSouth

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Jan 21, 2016
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There is a $50 minimum amount you need to spend when buying shares.
Ah, thanks.

That shouldn't be a problem, I am planning on investing for the longer term (not short term trading), so I would be looking at amounts of ±R 10 000 at a time for each buy or sell transaction.
 

rvZA

Senior Member
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Jan 3, 2021
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735
Ah, thanks.

That shouldn't be a problem, I am planning on investing for the longer term (not short term trading), so I would be looking at amounts of ±R 10 000 at a time for each buy or sell transaction.

I do have an account with eToro. I mainly use it for playing around, playing with cryptos, etc. I can no longer use them for playing around with Forex since they now require a minimum trade of US$1,000 if you want to trade in forex.

As for shares, I personally I prefer TDAmeritrade. Their annual tax reporting paperwork, monthly financial reports, etc., is brilliant. Easy to understand and easy to file either here or abroad. They are much more professional too. Due to the fact that I myself invest larger amounts of US Dollars on a monthly basis, I prefer to use them above eToro.
 

GSouth

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Jan 21, 2016
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I do have an account with eToro. I mainly use it for playing around, playing with cryptos, etc. I can no longer use them for playing around with Forex since they now require a minimum trade of US$1,000 if you want to trade in forex.

As for shares, I personally I prefer TDAmeritrade. Their annual tax reporting paperwork, monthly financial reports, etc., is brilliant. Easy to understand and easy to file either here or abroad. They are much more professional too. Due to the fact that I myself invest larger amounts of US Dollars on a monthly basis, I prefer to use them above eToro.
I did have a look at TDAmeritrade, but I am specifically looking for a platform that can give me access to the London Stock Exchange (which it doesn't seem they do), I already have access to enough of the US stocks and ETF's I'm interested in through Easy Equities.

With that in mind, Is there any reason you wouldn't recommend I go with eToro?
 

rvZA

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Jan 3, 2021
Messages
735
I did have a look at TDAmeritrade, but I am specifically looking for a platform that can give me access to the London Stock Exchange (which it doesn't seem they do), I already have access to enough of the US stocks and ETF's I'm interested in through Easy Equities.

With that in mind, Is there any reason you wouldn't recommend I go with eToro?

Then eToro will be the better platform for you.

I have no other reason or complaint against them as to why you should not use them, to be honest. I have been with eToro for the better part of 2-3 years now and never had any issues with them.

Like I mentioned above, they increased the minimum amounts with which you need to start a trade, but that is fine too if you plan to invest in larger amounts. For me, they increased shares from $25 minimum per trade to $50 minimum. Forex from US$25 to US$1000. Indices was increased from $25 to $200 minimum. Commodities from $25 to $90.
 

GSouth

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Jan 21, 2016
Messages
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Then eToro will be the better platform for you.

I have no other reason or complaint against them as to why you should not use them, to be honest. I have been with eToro for the better part of 2-3 years now and never had any issues with them.

Like I mentioned above, they increased the minimum amounts with which you need to start a trade, but that is fine too if you plan to invest in larger amounts.
Cool, thanks man, appreciate your advice!
 

Crankshaft

Well-Known Member
Joined
Aug 22, 2013
Messages
100
Hey Guys, thanks for all the suggestions so far.

Having checked out some of the proposals, eToro is looking like an attractive option.

Seems they changed their system a few years ago and now allow you to hold the underlying asset (incl. fractional shares like Easy Equities), and they also pay out the dividends of the shares you hold.
I also like the fact that it will give me access to more instruments.

From all the sources I can find, it looks like they do not charge any fees or spreads when buying or selling shares (unlike CFDs), and only charge a $5 withdrawal fee.

Is there anything I am missing?

They definitely have a spread, but that's no biggy. They also increase their capital protection to 1 million USD/EUR in case of broker default.
 

Tim_vb

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Joined
Nov 7, 2008
Messages
476
They definitely have a spread, but that's no biggy. They also increase their capital protection to 1 million USD/EUR in case of broker default.
Whats the bid/ask spread for equities and CFD?

I'm never a fan of service providers hiding their revenue models
 
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