In my last article on the need to add international or foreign stocks to your portfolio as a way to diversify and add some returns, I did mention that I would do another piece on the well-known platforms that can be used to achieve the dream of adding foreign stocks to your portfolio.
The first step is to find a trading platform that you can trade from. Choosing an online trading platform is not an easy task but it is a very important step in international investing. Here are some of the best platforms:
TDAmeritrade: (www.tdameritrade.com) TD Ameritrade, which has been rated number 1 by Stockbrokers.com , is an international trading platform that one can use to achieve international diversification. TD Ameritrade charges $0 commission on trades. It offers educational and free third-party research and analysis. Opening an account with TD Ameritrade requires either a social security number or an international passport number. Unfortunately, it does not cater to investors from Nigeria at the moment but it caters to investors from Ghana.
Interactive brokers: (www.interactivebrokers.com) According to information available on their website, Interactive Brokers is the professional’s gateway to the World’s markets. It offers low commissions, ticket charges, and it does not have any requirements as to minimum balances. It also pays interest on idle cash that you have not invested in stocks yet. There is an option for a free trial period that covers access to the entire trading platform, access to market data for all products, access to the research platform and more. Like TD Ameritrade, Interactive brokers do not accept account opening applications from Nigeria, but it accepts from Ghana and Kenya.
Charles Schwab (www.schwab.com) Charles Schwab can be rightly called the mother of all stock trading platforms, as it offers virtually all that a trader needs to trade on any financial product. According to the web site, there is zero commission on online stock and ETF trading. Opening an account with Charles Schwab requires a social security number, and that alone rules it out for Nigerians, unless you have been a US citizen or resident with a valid social security number. As at the time of writing, Charles Schwab had entered into a definitive agreement to acquire TD Ameritrade.
Nigeria’s Image: There are many more platforms like Interactive Brokers, TD Ameritrade, Charles Schwab and Fidelity Investments that I will not bore you with because they do not accept applications from Nigeria. For the benefit of readers from other African countries, it is worth mentioning that only a few US online equity brokers support non-US citizen clients. The major reason for this is the complexities relating to regulation, customer support, language, and paperwork. Unfortunately, the level of corruption in Nigeria and the activities of 419ners and Yahoo boys have combined to make it even more difficult for the few US online brokers willing to cater to Nigerian investors. Of the few, only two are open to allowing Nigerians trade on their platform, according to Stockbrokers.com’s 2019 review of international Stock Brokers. Those two are:
LightSpeed: (www.lightspeed.com) “Lightspeed is a direct-access, online discount brokerage firm that focuses on serving active and professional traders through its in-house and third-party trading platforms.” It is a division of Lime Brokerage. It offers good customer relationships in addition to news updates, research, and education that helps clients “to be best traders possible.”
ChoiceTrade; (www.choicetrade.com) ChoiceTrade is the other online trading platform that accepts applications from Nigerian investors, according to Stockbrokers.com. Founded in 2000, it parades itself as a platform that offers unlimited free stock trades.
Timing Difference: Be aware that there is a timing difference between Nigeria and other countries in the west. The implication of this is that you will have to stay awake to trade while others sleep. For example, during the Spring and Summer seasons, there is a 5-hour difference between Nigeria and New York, while the timing difference increases to 6 hours during the Spring, Fall, and Winter seasons.
Conclusion: Though the choice of trading platforms is limited for Nigerians, investors can still use the limited choice to their benefits, because of the US market houses such well-known companies like Apple, Uber, Facebook, Google, Samsung, Disney and a lot more. Those are companies whose products are used by Nigerians so it would not hurt to own parts of such companies.
Caveat Emptor (Buyer Beware): The author has only personally used TD Ameritrade’s trading platform and is not vouching for them or any of the others. Investors are enjoined to do their own individual due diligence and research before using these platforms. Nothing contained in this article should be taken to constitute investment advice.