This guide walks through all you need to know about how to buy US stocks from the UK, including a look at how modern online platforms like Lightyear can make the process simple, pain free and cost effective.
Table of contents:
Can I buy US shares from the UK?
Yes. You can buy US shares in the UK easily, without needing any new brokerage account or investment platform. Most reputable brokers will offer options to invest in a range of assets and markets to let their clients diversify their portfolios - and allowing investments in major US exchanges like the NYSE and NASDAQ is a natural part of that.
Step by Step: Investing in US shares from the UK
To build a picture, let’s take a look at how to buy NYSE listed assets - or how to invest in NASDAQ - from the UK.
- Pick the brokerage account or platform you want to use. Be sure to look at fees, convenience and security when selecting - we’ll cover more on common fees to watch out for later
- Complete your W-8BEN form to avoid paying unnecessary taxes as a non-US resident. You may be able to do this within the brokerage platform you’ve picked, or you can get the form online from the IRS (1). For a simple way to get started, check out Lightyear which lets you complete your W-8BEN digitally as part of your account onboarding. Capital at risk.
- Choose which US shares you want to buy, and follow your brokerage instructions or prompts to buy the assets you want to invest in
Time Zones: US market opening time in UK
NASDAQ and NYSE trading hours are set by US time zones - Eastern Standard Time (EST) to be exact. EST is 5 hours behind GMT, which means that while standard trading hours in the US are 9:30 am to 4:00 pm, on this side of the pond, that’s 2:30 pm to 9:00 pm. Both exchanges also offer pre- and post-market trading. This is usually 4:30 am to 9:30 am EST for pre-market trades, and 4:00 pm to 8:00 pm EST for post-market trading (2).
So, on the face of it, you can trade US stocks pretty much all day - from about 9:30 am GMT through to 1:00 am GMT. But it’s not quite that simple. Pre and post market trading patterns have fewer active participants - which can make them more volatile times to buy or sell assets. Activity tends to be driven by announcements taking place elsewhere in the world, and these reactions can cause big swings in asset values.
Make sure you get familiar with regular US trading times - and take a look at your watch - before you start to invest in US shares from the UK.
US exchange market holidays
It’s also worth noting that there are 9 annual market holidays. Some overlap with our Bank Holidays, but some - Thanksgiving or Independence Day for example - won’t be the same. Depending on how the calendar falls, there may also be some half trading days, such as Christmas Eve - there’s a handy annual NASDAQ holiday schedule available online so you can easily keep up (3).
Currencies: Buying in Dollars or Pounds?
When you buy US assets you’ll be investing in dollars. Assuming your funds are in British pounds right now, that means you’ll need to convert to USD before you can trade.
Brokerage platforms and companies offer currency conversion as part of the service when trading US based assets - but there may be a fee involved. Different platforms have their own approaches to exchanging your GBP for USD, but understanding what this will cost you is essential if you want to avoid the possibility of nasty surprises down the line.
Check the terms and conditions of the brokerage you pick carefully, looking out for any exchange fee, and also comparing the exchange rate they’ll use for the switch against the mid-market rate you’ll find on Google. This is important because brokers may add an extra fee into the rate used - which pushes up the cost of the assets you’re buying, and may not be immediately obvious.
Do your own research to find the best way to convert from GBP to USD before investing - Lightyear uses the interbank (mid-market) rate, with transparent fees of 0.35%. The cost of making your conversion is split out so you can easily check and compare - and so you’ll know there’s no hidden fee lurking in the rate used.
Fees: What to look out for when investing in US stocks
Investing in US stocks may involve some different fees compared to buying UK based assets. One, which we’ve just mentioned, is the cost of currency conversion. Exactly how much that is, and how transparently it’s presented to the customer - varies hugely. Shopping around is essential to make sure you get a fair deal here.
As a reference for other fees which may be involved in investing in US stocks from the UK, let’s look at Lightyear’s pricing for buying US shares. Bear in mind that each brokerage or investment platform will have their own fees, so you’ll need to check the costs of your preferred platform before you get started.
Fees when investing in US stocks from the UK, with Lightyear: (4)
- Open a multi-currency account: free
- Exchange from GBP to USD: 0.35% of exchange value
- Buying US shares: 0.1% of purchase value, from a minimum of 0.1 USD to a maximum of 1 USD
- Buying ETFs: free
- Invest in US Money Market Funds: 0.09% - 0.3% annually, depending on value of assets
- Complete W-8BEN: free
One other note if you’re considering Lightyear - you’ll also earn interest on uninvested USD cash, which sits at 4.5% (variable) at the time of writing. That means your money is always working for you, even before you’ve picked which US assets to put it into.
Choosing US stocks or funds to buy in the UK
So, which US stocks should you buy from the UK?
As with all investing, the answer will depend on your existing portfolio, your risk tolerance, your time horizons and other factors. There’s no one size fits all approach to buying US stocks in the UK - so taking personal advice is a smart plan if you’re unsure.
The US exchanges are home to many of the world’s largest and most famous tech brands which can make an interesting buy. Another option popular with Lightyear users is to buy US based ETFs. These are baskets of assets which track a particular sector, commodity or index for example. Using ETFs can be another easy way to diversify, as you’ll be buying a small stake in a whole range of companies, depending on the specific ETF you pick. For example, you might buy into the S&P 500 through an ETF, to allow your investment to track the performance of some or all of the biggest 500 listed companies in the US.
Diversify, diversify, diversify: check out US fractional shares
One idea that’s worth considering - take a look at whether buying US fractional shares might be an option which would benefit your portfolio, by bringing in further diversification without needing masses of fresh investment.
Fractional shares are - as the name suggests - fractions of a single share. As US stocks tend to be higher prices than UK stocks, buying fractional shares can be a way to get a foot in the door, and acquire some US based assets of major names like Apple or Tesla without needing to fork out the whole price of a share upfront.
Read more about fractional shares and what contribution they could make to an investment strategy.
As an investor, you’ll be focused on building a diverse portfolio which meets your investment goals and planned time horizons. As well as buying UK assets, spreading your investments geographically by buying US stocks in the UK can help build breadth. Investment brokerages and platforms like Lightyear offer a low cost way to get started in investing in US assets from the UK, making it a feasible option even for newer investors.
Disclaimer
When investing, your capital is at risk.
By Martin Sokk
Martin is a lifelong product builder in the finance world having joined Wise as the first product person. Martin began working with Mihkel on the idea for Lightyear in the summer of 2020. After meeting for a coffee to catch up, they both quickly realised that they shared a strong opinion: investing in Europe is still broken.
