Foreign stock investment is a lot like investing in the Canadian market. You’ll need to find a stock trading platform with access to international exchanges so you can buy Hong Kong stocks, European stocks, Indian stocks, Japanese stocks, Australian stocks or more from Canada.
Two ways to buy international stocks from Canada
- Invest directly in stocks listed on global exchanges – such as Facebook and Apple – using a broker with an international stock trading platform.
- Buy units in a global-themed exchange traded fund (ETF) or mutual fund.
Compare stock trading accounts to buy international stocks
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This isn't an exhaustive list of all the trading platforms out there. What's best for you depends on your own investing strategy, budget and financial goals.
Step 1: Compare options and choose a broker
There are many different account options to choose from, and it’s worth comparing them to choose the best one for you, like you would any other financial product. You’ll want to consider things like:
- Brokerage fees
- Access to international markets
- Exchange rates
- Research tools
- Customer service
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Compare online platforms to buy foreign stocks in Canada
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Step 2: Open your account
Once you’ve decided on an online broker, you can open your share trading account. If you already have a bank account with that provider then you can usually sign in via their online banking portal. If not, you will have to open a new account. To open an international share trading account you’ll generally need to meet the following eligibility criteria:
- Be 18 or over
- Have an Canadian residential address
- Have a mobile number
As part of the application process you will typically need to provide:
- Personal photographic identification (for example your drivers licence, passport)
- Your Social Insurance Number (SIN) or business registration number if applicable
When opening the account you’ll be asked to choose whether you’ll be trading as an individual, with a joint account (for example, with your partner), as a company or organization or on behalf of a trust. Because share trading has income and tax implications you must provide details of your income and occupation. Along with your personal information, you may be required to disclose the source of your income and the origin of your financial position.
After you’ve provided your personal details, you’re up to the account set-up stage. This involves providing the details of your linked bank account, setting up financing options if applicable and choosing from the various options that may be available. Once you’ve confirmed everything and double checked your details, you’re ready to load your cash management account and start trading.
Already have a stock trading account?
Some providers will require that you open one account for local shares and a separate account for international shares. If you already have a local account, you can open an international one in just a few quick steps. Simply follow the steps within your platform for adding an international account and link it to your regular account.
Step 3: Fund your account and start trading
Simply fund the linked international account to start trading foreign stocks, plus any broker fees that will apply. Remember that when you transfer funds into your linked foreign currency account you’ll usually have to pay a foreign currency conversion fee, so it’s best not to be transferring funds in and out of the account on a regular basis. It can take a few days for your funds to be loaded into the cash account, so keep this in mind when you decide you’d like to make a trade.
Once you’ve set everything up, you can trade online through your new international share trading account. Expect to see a dashboard with features such as current share prices and changes over time and options to buy, sell or research. With the big banks and other trading accounts geared towards beginners, you may find tutorials and introductory material to help acquaint you with the available features.
What’s the difference between Canadian and international stock trading?
When trading shares, you can choose to do it domestically or internationally.
Domestic
Trade shares listed on Canadian stock exchanges. Trade within certain business hours and access only Canadian investment options, which make up about 2.7% of the global market. Major Canadian stock exchanges include the Toronto Stock Exchange (TSX), Montreal Stock Exchange (MSE) and Canadian Securities Exchange (CSE).
International
Trade shares from global markets around the world 24 hours a day, subject to local market hours, including big global brands and household names. Gain access to more options, but also experience more risks and challenges.
International stock exchanges include the New York Stock Exchange (NYSE), London Stock Exchange (LSE), the National Association of Securities Dealers Automated Quotations System (NASDAQ) and many others.
Compared to domestic trading, there are both advantages and disadvantages to trading shares internationally.
Advantages of foreign stock investment:
- Gain access to a wider variety of investment options.
- An internationally diversified portfolio can help protect you from the downturns of the Canadian market.
- You can trade 24 hours a day rather than only within set business hours.
- More buyers: The actual value of your shares depends on how much you can sell them for. When trading internationally, there may be a larger number of different interested buyers and you might find it’s easier finding a buyer.
Disadvantages of international trading:
- Exchange rates can fluctuate and can significantly hurt (or help) your return on investment.
- Foreign policy can affect your returns. It’s possible that changes to another country’s foreign policies, local instability or other issues can impact the value of your investment in ways beyond your control. This is a largely uncontrollable risk.
- Taxation and related issues may be more complicated when trading international shares.
Capital gains tax on foreign shares
The Canadian government requires you to disclose information about any foreign assets you hold so that gains and dividends can be taxed appropriately. The taxes you may incur will depend on the country in which you are investing and the type of asset(s) you are invested in.
Bottom line on buying foreign stocks in Canada
Trading international shares is a great way to diversify your portfolio and access a wide variety of stocks. As long as you are using a broker that supports international exchanges, you can buy and sell international shares with ease. You will need to be mindful of the exchange rate, as this will impact your return on investment.
If trading is new to you, you might want to start with the basics of share trading. If you already know how to buy international shares, you can simply compare brokers and open an account.
Extra tips
Making big trades? Look for lower exchange rates, research tools that allow you to make more reliable investments and flat broker fees rather than percentage rates. Where applicable, it may be worth accepting higher flat fees in exchange for lower percentage rates. Avoid low maximum limits which might constrain your trading.
Making a lot of small trades? You may want to avoid flat fees that take a big chunk out of the potential profits of each trade and stick to percentage rates that will cost you less. Low maximums are less of an issue, but high minimums might be a problem.
How will you diversify your portfolio? Not all accounts will give you the same options. Plan what kind of trades you want to make and consider whether a given account will let trade ETFs and if you are able to do forex trading through the same platform.
Looking for US stocks? Check out our guide to buying US stocks.
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Disclaimer: This information should not be interpreted as an endorsem*nt of futures, stocks, ETFs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circ*mstances, and obtain your own advice, before making any trades.
