It’s always a good idea to diversify your investment portfolio by purchasing both local and international stocks. Because of this, we’re going to show you how to buy Nasdaq stock in Australia.
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What is the Nasdaq Index
When talking about Nasdaq, we can refer to two different things:
- This includes shares from huge multi-national corporations like Microsoft, Apple Inc and Intel.
- In addition, you can also invest in Nasdaq’s own indexes, including the Nasdaq Composite and Nasdaq-100.
The former is comprised of 3,300 common equities, including American Depositary Receipts (ADRs), Real Estate Investment Trusts (REITs), ordinary shares and so on.
Overall, both the indexes can be considered relatively safe investments, considering their steady climb over the past five years. Following a dip back in December 2018, they are currently on the rise, beating out previous peaks. However, with asking prices that range from USD 7000-8000, you definitely need some significant capital to invest in them!
What is Nasdaq?
Before you begin to invest in one of Nasdaq’s securities or indexes, it’s best to know the important details. Hence, here is a brief summary of them:
Nasdaq was founded in 1971 to allow investors to exchange securities on an efficient electronic trading system. Up until 2006, Nasdaq operated under the National Association of Securities Dealers (NASD). After that, it separated from NASD and joined OMX, which is a Scandinavia-based exchange group. Together, they are known as the Nasdaq OMX group, the largest securities exchange company in the world.
Today, the Nasdaq OMX group operates in five central securities depositories, one clearinghouse and 25 markets in both the USA and Europe. Equities have always been the primary focus of the group, although they do also operate commodities, derivatives, fixed income and more. The group has always been known as a leader in trade technology.
In fact, Nasdaq’s trading system replaced the archaic ‘specialist’ system utilized by all global markets at the time. Prior to this, the specialist system had been in use for around 100 years!
Today, Nasdaq’s trading technology is being used by 50 countries. The company’s influence is so large that it backs 1 in every 10 securities trade occurring globally!
All these reasons are why the largest corporations in the world keep listing their stocks in the groups. Hence, if you want to trade high-value international stocks, Nasdaq is the go-to marketplace.
Why Buy Nasdaq Shares?
Before you invest in any of the Nasdaq indexes, consider whether you’re making the right decision. Hence, in this section, we’re going to be discussing the pros of purchasing Nasdaq stock:
Easy access to a ton of valuable shares: The Nasdaq Composite is one of the most popular indexes in the world of securities. This is because it lumps together so many high-value stocks from some of the world’s biggest tech-giants. This includes names such as Apple Inc, Oracle, Amazon, and Google.
Likewise, with the Nasdaq 100 index is a collection of securities from the most highly-traded US companies. We’re talking about corporations that report an average daily trading volume of 200,000 or more!
You can easily diversify your investment portfolio: While the brunt of the Composite index’s weight is in the tech space (around 46%), it does contain a lot of securities in a variety of industries as well. As of May last year, the Nasdaq Composite Index is also comprised of securities from the following areas:
- Health care
- Consumer services
- Consumer goods
- Gas and oil
The Nasdaq 100 is quite similar in terms of its composition. 54% of its weight is accounted for when buying securities from tech giants.
Both indexes are performing extremely well – if you look at the performance charts for both indexes, you’ll see that they’ve steadily risen over the past decade. We believe this upward trend is likely to continue, especially with plans to introduce cryptocurrency features into the mix.
Nasdaq’s seemingly stable future has a lot to do with the faith that investors place in it. This stems from the fact that they use the most cutting-edge technology and police the securities in their indexes to the strictest standards.
Ways to Buy Nasdaq Shares in Australia
If you live in Australia, there are two main ways to invest in Nasdaq shares. The first is to go through a direct stockbroker and outright purchase shares. In return, you will own a percentage of the stock.
You’ll have to open up an international brokerage account, which you can do through any large Australian bank. This includes:
- Westpac’s Global Markets account
- CommSec’s Pershing account
- ANZ’s Global Shares account
- NAB’s International Shares account
However, keep in mind that purchasing shares outright means that you have to pay the full ask price. At the time of writing, the Nasdaq Composite Index is currently valued at a whopping US 8,146.49! The Nasdaq 100 is not far behind at all, with each share worth USD 7,834.90
It’s definitely not the kind of capital that a first-time investor should play around with. And that’s regardless of how stable the stocks may seem! Make sure you also read our How to buy Tencent guide.
The second method is to enter into a Contract for Difference (CFD) trading using a broker like Plus500. With CFD trading, you don’t actually own shares. Instead, it’s more like betting on the price movement on a stock.
When you enter into a CFD for a certain stock, you pay a fraction of the asking price. This is usually 10%. Hence, instead of paying USD 7,834.90, you’d just spend USD 783.49 for an opening. This is known as ‘trading on a margin’ and it lets you invest more with less.
Where To Buy Nasdaq Shares in Australia
Whether you want to buy shares or get into CFD trading, you’ll have to go through a broker. You need to be smart about choosing a broker, making sure they’re both trustworthy and offer the right features.
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While the Plus500 may not have the same advanced features, it’s still pretty user-friendly on its own. You’ll still get access to a wide variety of global markets and investment instruments. Plus there aren’t any trading fees to worry about! Instead, you just have to pay the spread after you trade on a margin.
And that’s all there is to know about buying Nasdaq shares in Australia. Now you know what Nasdaq is and why it might be worth investing in its indexes. Furthermore, you know your two buying options and the benefits of each.