Investing in Foreign Companies: A Beginner's Guide

At some point, you may decide that you want to invest in a foreign company. If this is the case, there are a number of ways that you can do so. Here are the basics of how to invest in a foreign company.

Stock

The most direct way to invest in a foreign company is to purchase their stock. In order to do this, you will need to open a brokerage account that will allow you to purchase stock in another country. You will then have to exchange your currency for the foreign currency to make the purchase.

Mutual Fund

You can also invest in foreign companies through a mutual fund. With this method, you will be able to purchase shares through your normal brokerage account. The mutual fund will handle the details of the foreign investment for you.

ADR

Another popular tool that allows you to invest in foreign companies is an ADR. This stands for "American depository receipt." This is available when a bank or financial institution purchases a large number of shares in a foreign company. They will then hold these shares and issue shares that can be traded on the stock market. The shares represent a certain number of shares in the foreign company.