| Investing in the stock market can be a difficult | | | | It's true that not all foreign companies sell American |
| enterprise to engage in. Make a wrong choice and you | | | | depository receipts on US exchanges such as the |
| can lose a bunch of money really quickly. One thing | | | | NASDAQ or the New York Stock Exchange, but |
| that isn't hard about stock market investing though is | | | | many of the more established and larger companies |
| the mechanics of investing itself. | | | | abroad will. And after all, if you're just testing the |
| With online stock trading available so cheaply, it's easy | | | | waters of foreign stock investment, it may be a good |
| to pick a stock and place an order with just a few | | | | idea to stick with some of the larger more established |
| clicks of your mouse. And if, by chance, you aren't | | | | companies anyway. |
| technologically savvy and don't like to work on the | | | | ADRs are traded on the US stock exchanges and are |
| Internet yourself... you can buy and sell stock by simply | | | | treated almost exactly like US stocks. You can usually |
| picking up the phone and calling your local stockbroker | | | | buy them in units of 1 to 10 shares of the foreign |
| and telling them what you want. | | | | companies stock that they represent. The ADR |
| Trading US bonds, and corporate bonds, and even | | | | certifies that the shares have been bought and are |
| precious metals like gold and silver can be just as | | | | currently being held in a sort of custodian account |
| easy. | | | | outside of the United States. |
| Of course... it's easy when you're dealing with | | | | One major advantage of purchasing American |
| American companies that are listed on the US stock | | | | depositary receipts is that generally speaking you will |
| exchanges such as the NASDAQ and the New York | | | | pay less for broker commissions than you would on |
| Stock Exchange, or even the American stock | | | | shares that were actually bought on foreign |
| exchange (the pink sheets). But what happens when | | | | exchanges because even if your stockbroker does |
| you want to buy stock in foreign companies? It's not | | | | offer foreign shares in your account, chances are |
| as easy then! | | | | they're going to charge you more to make the trades. |
| So what do you do if you want to buy stock in a | | | | Another great advantage is that dividends paid on |
| foreign company? That's what I'm going to talk about | | | | ADRs are usually paid in US dollars which can be a |
| in this article today. | | | | huge benefit and save you considerable currency risk |
| For the most part you're going to have to purchase | | | | from fluctuating foreign currencies. |
| the stocks on foreign exchanges that are located | | | | So there you have one very simple way to get the |
| abroad. But that isn't always the case as some foreign | | | | benefits of investing in foreign companies without the |
| companies sell shares on American exchanges. These | | | | hassle of buying foreign stocks on foreign exchanges |
| shares are usually called American depository receipts | | | | that you are not familiar with. |
| or ADRs. | | | | |