Looking to buy Apple shares? If so, you’re not alone; the company has become increasingly popular among consumers and investors over the last couple of decades. Products such as the iPhone have led to a rise in Apple’s share price of around 1,000% in the last decade.
As online sharedealing has become increasingly simple and cost-effective, buying Apple shares has become easier. However, there are still a number of potential pitfalls for UK-based investors. Read on to find out what the challenges are and how you can buy Apple shares with the least amount of effort.
How to buy Apple shares
In response to increasing demand among investors for a variety of international stocks, sharedealing providers have made it increasingly simple to buy foreign-listed shares such as Apple.
In fact, many online sharedealing providers provide the opportunity to buy foreign-listed companies through products such as an ISA (Individual Savings Account), a SIPP (self-invested personal pension) or a standard sharedealing account.
Of course, before buying any stock it is a good idea to shop around for the best online sharedealing provider given your personal circumstances. Sites such as The Motley Fool provide guidance on which online sharedealing providers offer the best value for money given factors such as how often you intend to trade, as well as how much you intend to invest.
Once you have found a sharedealing provider, you will need to open an ISA, SIPP or sharedealing account in order to buy Apple shares. Information such as your address history, the source of the funds you intend to invest and other financial information will be required in order to open an account, so it is a good idea to have such details to hand.
Opening an account generally takes less than ten minutes. Once opened, you will need to fund the account in order to buy shares. This is usually done through a debit card payment or a bank transfer; the details of which are normally required when opening your account.
Having funded your account, you will need to go to the dealing section of your account; the location of which can vary depending on the sharedealing provider. There, you will enter the company name or ticker (in Apple’s case this is NASDAQ:AAPL) and the number of shares you wish to purchase. Clicking on ‘deal’ (or a similarly-named button) will mean that you are now a shareholder in Apple.
What are the costs of buying Apple shares?
As well as a sharedealing provider’s standard account management and dealing costs, there may also be a fee to convert sterling into dollars in order to purchase US-listed Apple shares. This fee can range significantly between different sharedealing providers, so it is worth shopping around to find the best deal. Since currency must be converted when a foreign stock such as Apple is bought as well as sold, the total conversion fee can be significant.
Some sharedealing providers offer accounts where foreign currency can be held within them. This could reduce foreign currency conversion fees for individuals who wish to maintain a balance in US dollars, for example, that is used to buy and sell a variety of US-listed stocks over time. However, foreign currency cannot be held in an ISA, so the potential for lower currency conversion costs must be weighed against reduced tax efficiency.
As with any situation where foreign currency plays a role in the transaction, there can be gains or losses from fluctuations in the pound/dollar exchange rate. This could increase or decrease your profits or losses from owning shares in Apple.
Dividends received from US-listed companies that are held by non-US citizens are subject to a withholding tax of 30%. However, it is possible to reduce the tax rate to 15%, or 0% if the relevant investment is held within a SIPP, by completing and submitting a W-8BEN form, which is then valid for three calendar years after being submitted. The W-8BEN form is usually available from sharedealing providers that allow clients to buy and sell US-listed stocks.
Buying US-listed shares such as Apple has the potential to be a worthwhile move for some UK investors. It could boost diversification and provide an improved risk/return ratio.
While there are additional costs to consider, the process of buying and selling foreign shares has become cheaper and simpler in recent years. Therefore, now could be a good time to consider investing in international stocks within your own portfolio.
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