If one is an American citizen, it is actually possible for him to be able to invest in stocks outside of the country. Now these types of stocks are known as American depository receipts or simply ADRs. Of course if one would want to go into ADR investing, then there are actually a few things that one would have to take note of before he would go through with it.
Basically, an ADR is actually just a stock that consists of foreign shares from a foreign company. Although the shares would come from a foreign company, these stocks can still be traded in America just like regular stocks. In order to invest in these stocks, one would have to go through a brokerage firm or a broker.
Now there are three kinds of ADRs that one can avail of when he enters. Of course there are the low level ones, the mid level ones, and finally, the high level ones. What separates them would mainly be how much one can make from them and how difficult it is to get them.
Now the low level ones are obviously the less difficult ones to get but these are also the ones that would give low profits. Another thing about these low level ones are that they can only be found in an over the counter market and not in the stock exchange. Also, one does not need to submit that many requirements to the Securities and Exchange Commission in order to acquire this kind of stock.
The second one will obviously get more profits but will also have more requirements as well. Now these stocks are listed in the exchange so one will be able to see the stock quotes by looking at the American stock exchange. He will also be able to see the stock quotes on Nasdaq as well.
The final type of investment is the level three receipt which is the one that would give the highest earnings. Now these are the types of stocks that would be really highlighted in the stock exchange because they are the most prestigious ones. Now they would also have the most number of requirements from the SEC.
Now if one has always wanted to invest in stocks but could not, now is the best chance. What makes ADRs great is that one can actually invest in foreign companies like he is investing in local regular stocks. Another great thing about them is that one can avoid foreign taxes and the transaction costs will end up much lesser.
So these are some of the things that one should know about these kinds of investments. One should take note though that because of inflation, then there might be a big risk of losing some money. So if one is going to start investing in these types of stocks, then it is definitely recommended that one be very conservative and do not go for the aggressive types of investments just yet.
Basically, an ADR is actually just a stock that consists of foreign shares from a foreign company. Although the shares would come from a foreign company, these stocks can still be traded in America just like regular stocks. In order to invest in these stocks, one would have to go through a brokerage firm or a broker.
Now there are three kinds of ADRs that one can avail of when he enters. Of course there are the low level ones, the mid level ones, and finally, the high level ones. What separates them would mainly be how much one can make from them and how difficult it is to get them.
Now the low level ones are obviously the less difficult ones to get but these are also the ones that would give low profits. Another thing about these low level ones are that they can only be found in an over the counter market and not in the stock exchange. Also, one does not need to submit that many requirements to the Securities and Exchange Commission in order to acquire this kind of stock.
The second one will obviously get more profits but will also have more requirements as well. Now these stocks are listed in the exchange so one will be able to see the stock quotes by looking at the American stock exchange. He will also be able to see the stock quotes on Nasdaq as well.
The final type of investment is the level three receipt which is the one that would give the highest earnings. Now these are the types of stocks that would be really highlighted in the stock exchange because they are the most prestigious ones. Now they would also have the most number of requirements from the SEC.
Now if one has always wanted to invest in stocks but could not, now is the best chance. What makes ADRs great is that one can actually invest in foreign companies like he is investing in local regular stocks. Another great thing about them is that one can avoid foreign taxes and the transaction costs will end up much lesser.
So these are some of the things that one should know about these kinds of investments. One should take note though that because of inflation, then there might be a big risk of losing some money. So if one is going to start investing in these types of stocks, then it is definitely recommended that one be very conservative and do not go for the aggressive types of investments just yet.