How to Buy US Stocks in South Africa

How much should I invest?

You can start investing in stocks in South Africa with 965.53 South African Rand. This is equal to $50 on the international exchange market as of the last week of May 2023. With 50 dollars worth of investment, you can buy 1-2 cheap shares.

Finder.com statistics show that 20% of South Africans invest less than R8,500, which is the amount that they are most likely to invest overall. Interestingly, 5% of South Africans claim to have invested between R8,500 and R35,001, 2% between R35,001 and R70,000, and 6% more than R70,000.

Some experts claim the amount of capital needed for a successful and profitable investment in stocks is a minimum of R5000 ZAR. While this might be true based on certain factors, the minimum threshold largely depends on the chosen broker. This means that some brokers have a designated amount they set as the minimum deposit you need to start buying stocks on their platform.

It is always more cost effective to purchase more shares than one, even though one share is the minimum that can be purchased. Brokers frequently advise clients to buy shares in lots of 50 or 100 because they are easier to accumulate and keep track of.

Another simple way to invest in the South African stock market is to purchase a broad market index, even though this is not financial advice. ETFs can be used to accomplish this at a low cost. There is a single index that ETFs follow on the South African stock market.

Best brokers to buy US stocks in South Africa

Over the long term, stocks undoubtedly provide investors with the highest growth potential (capital appreciation). As a result, stockholders willing to stick with their investments for a long time will undoubtedly witness strong returns.

But before you step on the success baseline of investing in stocks in South Africa, your initial decision needs to be proportional to what you seek. If you seek to succeed, then seek a successful stockbroker.

Finding the best brokers should be on your list if you are seeking how to invest in U.S. stocks in South Africa. Selecting the best stock broker in South Africa could eliminate some risks you might encounter trying to get an exciting new income stream. This is because your success in the stock market is determined by the service offered by each broker you choose.

Here are the top stock brokers for investors seeking how to invest in U.S. stocks in South Africa:

RoboForex

RoboForex Review

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Your capital is at risk.

RoboForex offers a wide array of products and services for those interested in investing. For instance, RoboForex offers tight spreads starting at 0 pips with low commissions. With the help of fast order execution via the best trading platforms, MetaTrader 4 and 5, many traders assert that they offer exceptional Forex trading conditions. The companies offer up to 36 FX pairs, metals, and an array of CFDs.

RoboForex offers CopyFX, which is its copy trading platform. It allows users to engage in copy trading with a minimum deposit of $100. With a high level of personalization, users can control every step of their investment journeys.

It offers two ways of investing in the foreign exchange markets: 1) Become a Forex trader and trade directly in the market with the help of a Forex broker, and 2) Forex copy trading or CopyFX allows new users to begin trading immediately by copying the moves of professional traders.

Lastly, RoboForex offers over 12,000 stocks, Indices, and ETFs on bonds, securities, commodities, etc., which are available across six platforms. They are available in over 169 countries and in 10 different languages. This makes it a highly useful platform for Forex investors across the globe.

IC Markets - best for active traders

IC Markets Review

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Your capital is at risk.
Up to 75.93% of the broker’s non-professional clients incur losses when trading CFDs.

One of the top stock brokers for traders from South Africa is IC Markets, an Australian-based Forex CFD broker that is regulated. Through IC Markets, South Africa investors have access to over 10,000 securities from some of the most well-known companies in the world, including Facebook, Apple, and BHP Billiton. Additionally, you can trade over 730 large-cap stock CFDs with fast execution on the NASDAQ, ASX, and NYSE stock exchanges.

ASIC, FSA, and CYSEC are just a few of the numerous international financial regulators that oversee IC markets. In addition to stock trading, it is also possible to engage in Forex, futures, and commodity trading. Because of its high leverage, small spreads, and low commission costs, IC Markets draws traders. For a better trading experience, IC Markets offers traders three cutting-edge trading platforms: MetaTrader 4, MT5, and cTrader.

888 MYR is the required minimum deposit amount. IC Markets provides traders with a minimum leverage of 1:20 and a maximum leverage of 1:50. Traders with a high-risk tolerance and the ability to trade with low volatility typically prefer high leverage, while those with small initial deposits prefer low leverage.

Trading fees at IC Markets are divided into various account types. The commission fees for the Raw Spread account, formerly known as the True ECN account, are 15.54 MYR per lot, while the commission fees for the Raw Spread account, also known as the cTrader Raw account, are 13.32 MYR per lot. The standard account is not subject to any commission charges.

Exness - best for copy trading stocks

Exness Review

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Your capital is at risk.
You can lose your money.

If you are searching for Forex investment platforms in South Africa, Exness may be a great choice. As one of the largest Forex brokers in the world, Exness is considered a highly trustworthy international Forex broker. With over 209,000 active traders, they are officially one of the largest brokers as far as Traded volume is concerned.

Offering very low spreads of almost zero pips with their ECN account, using Exness can be one of the most cost-effective ways to invest in the Forex market. Safe and secure, Exness is regulated by the FSCA in South Africa, as well as other elite regulation agencies such as FCA in the UK and CySEC in Cyprus. Therefore, investors can rest assured that their money is being watched by some of the most trusted organizations in the world.

They offer ZAR-based currency trading accounts and local Internet banking deposits & withdrawals in Rand to South African traders. Additionally, Exness offers variable spreads for every trading account. With very low spread averages of 1 pip for EUR/USD, users can make money regardless of their account type. Moreover, by offering no extra commission when using their Standard & Pro Accounts, users can rest assured that they receive some of the lowest fees for Forex traders.

Best stock trading apps in South Africa compared

How to start trading stock in South Africa?

For those investors seeking to invest in U.S. stocks in South Africa, starting stock trading can be simple and daunting at the same time. What information you have before investing in stocks can determine how well you get established in the market over time.

You must open an account with a local or international broker in South Africa before you can begin investing in stocks. It might be advisable to work with a local broker if you want to purchase stocks that are domestically traded in South Africa. However, if you want to purchase foreign stocks, you will need a global broker who facilitates the buying and selling of stocks globally.

Below are quick tips and guides on how to invest in U.S. stocks in South Africa:

Before choosing your international broker, remember to check the fees, available currency pairs, and assets. Additionally, ensure you are trading the intended stock; look up the exchange and ticker symbol.

Generally, if you buy stock abroad, you must also sell it there; for instance, if you buy stock in the US, you must also sell it on the same market. There may be different commissions and fees for international trades involving U.S. stocks.

Is Investing in US Stocks worth it?

Investing in US stocks is worth it for every South African investor. While investing in the US markets helps you diversify your portfolio, the market offers extensive avenues to invest in top sectors. These sectors include technology, finance, automobiles, and gold.

Investing a part of your assets in such markets also makes you independent of the South African stock market and economy. The US stock market is typically the best option when you want to diversify your portfolio.

A South African investor will be more appreciative of the rising value of the dollar and the availability of numerous stocks from around the world. In addition to investing in the stock, you are also investing in the value of the dollar. Your investment will increase if the dollar value relative to the rupee rises.

The SP 500 stock index is one of the best options, and according to professional traders, Monday is the best trading day for this stock. Importantly, holding the S&P 500 index over time ensures great returns.

While the S&P 500 index measures the performance of 500 of the biggest stocks traded on the Nasdaq and the NYSE, the stock index yields 10% returns on average.

Three options exist for purchasing the S&P 500 index:

Purchasing shares of an exchange-traded fund (ETF) or index fund that closely resembles the S&P 500 is among the most straightforward and cost-effective ways to invest in the index.

What are the best stock trading brokers for beginners in South Africa?

Beginner investors learning how to invest in U.S. stocks in South Africa must understand the need to choose a top broker. At first, every broker might look to offer similar services, but a closer look will differentiate the brokers. The characteristics that distinguish these brokers are what can make or limit the profits of investing in stocks in South Africa.

However, every novice trader must choose a stock broker that meets different investor expectations. These brokers offer all financial instruments and as many markets as possible to investors of all skill levels. So if it is your first time investing, search for a platform that will provide the most options for you.

The best brokers for beginners are those with copy-trading capabilities and quality educational resources. An investor from South Africa who wants to start trading stocks should choose such stock brokers because they are unquestionably the best.

RoboForex and eToro are among the top stock trading platforms you should consider when investing in U.S. stocks in South Africa.

Can I trade with an international stock broker?

Yes. Trading with an international stock broker if you reside in South Africa is possible. But you must understand that there are exceptions. Verify that reputable financial regulators or institutions are in charge of the broker.

Get registered with them to begin investing if they have a license and accept South African clients. But follow local laws where necessary.

Look for the following characteristics in an international broker when selecting one:

Whether the broker is headquartered in South Africa or elsewhere is irrelevant if you are unsure whether a broker is authorized to offer services in South Africa. Given that foreign companies have different legal reporting requirements than U.S. companies, it might be more crucial to conduct extensive research before purchasing an international stock.

Do I pay taxes for stock trading in South Africa?

Yes, you need to pay tax for stock trading in South Africa.

A capital gain occurs when you sell stocks for a profit. Therefore, any profits you have made from trading shares during the year are taxable and subject to capital gains tax (CGT). Your capital gains from selling securities are subject to tax when you file your yearly tax return.

When calculating capital gains, you would add up the profit from selling the shares and deduct the purchase price.

Based on your overall income, your tax rate will be determined by which tax bracket you fall under. You will be subject to annual taxation based on your income from capital gains if you frequently buy and sell shares. The loss from a trade can be subtracted from the regular taxable income by traders.

Although profits aren't taxed until you sell your shares, the tax consequences are a little different if you're categorized as a "share trader".

When compared to paying tax on your share sale profits directly, capital gains taxes are less expensive. Because of this, many people decide to keep their shares for a little while longer in order to "qualify" for capital gains tax. When you sell shares, unless they are in a CGT-free investment, capital gains tax (CGT) is typically assessed at a simple flat rate of 20%.