Overseas Stock Investing for Beginners: Just Remember These Key Points!
Overseas stock investing is no longer an exclusive club. Investing in global companies like Apple, Tesla, and NVIDIA beyond the domestic stock market is now a fundamental part of wealth management. But feeling overwhelmed when you try to start? Don't worry. We've simplified the 3 core principles and practical tips every overseas stock investing beginner must know.
Investment Fundamentals: Understand ‘Exchange Rates’ and ‘Time Differences’
Unlike domestic investing, overseas stocks introduce two additional variables. Grasping these variables is your first step.
- The Impact of Exchange Rates: Foreign stocks are traded in foreign currencies like the ‘dollar ($’). Even if the stock price rises, a falling exchange rate (KRW/USD) can reduce your profits or lead to losses. Conversely, even if the stock price remains unchanged, a rising exchange rate can generate foreign exchange gains. Always check whether the KRW/USD exchange rate is high or low when starting your investment.
- Understanding Time Differences: The U.S. stock market (New York Stock Exchange) typically opens at 10:30 PM Korean time (during daylight saving time) and trades until the early hours of the next day. If you want to trade in real-time, you need to utilize nighttime hours. However, recently, ‘Pre-market / After-hours trading’ times have been expanded for ‘individual investors trading overseas stocks,’ allowing for more flexible trading.
Key to Stock Selection: Focus on ‘Companies You Know’
There's no need to get bogged down in complex industry analysis or financial statements from the start. Investing begins with interest and understanding.
- Companies Close to Your Daily Life: Look for companies behind products or services you frequently use. If you use an iPhone, consider Apple; if you shop online frequently, look at Amazon; if you're interested in electric vehicles, Tesla. Companies you encounter daily are easiest to understand and offer high information accessibility.
- Companies with a clear ‘what’ they sell: Innovative tech companies are fine, but choose companies where it's clear what they ultimately sell to make money. For beginners, companies with a clear core business are safer than complex holding companies or those with overly diverse business structures.
- Start small: While foreign stocks are traded per share, many brokerages now support ‘fractional trading’. It's important to start with small amounts like 10,000 won or 100,000 won to learn market trends without pressure.
Practical Investment Principles: Make ‘Diversification’ and ‘Long-Term’ Habits
The most successful strategy in overseas stock investing is maintaining a long-term perspective.
- Avoid All-In Bets, Practice Diversification: Never invest all your money in a single stock. Reduce risk through diversified investing across multiple stocks. For example, allocate funds not only to IT tech stocks but also to consumer goods or healthcare-related companies.
- Make time your ally: Don't get overly excited or discouraged by short-term stock price fluctuations. Major global companies tend to trend upward over the long term. A wise strategy is to manage your average purchase price by spreading out your buys over time through dollar-cost averaging, where you consistently buy a fixed amount each month.
Final practical tip: Check taxes and fees
Tax structures for overseas stock investments differ from domestic stocks.
- Capital Gains Tax: If your overseas stock investments generate annual profits exceeding 2.5 million won, a 22% capital gains tax applies to the excess amount. (Domestic stocks are tax-exempt except for major shareholders). You must file directly each May.
- Trading Fees and Currency Conversion Fees: The commission rates charged by domestic brokerages for overseas stock trading vary. Additionally, carefully compare the currency conversion fees (spreads) incurred when exchanging won to dollars and choose a brokerage with lower fees.
Key Summary: Understanding exchange rates and time differences, starting small with companies you know, and adhering to the basic principles of diversification and long-term investing make overseas stock investing no longer difficult.
댓글