IMPORTANT UPDATE: The method in this article is no longer valid. Watch the video above where I will share an easier way to buy U.S stocks in South Africa. You don’t want to miss it!
Fortunately for us South Africans, the United States stock market is open to all foreign investments. So that means we can buy amazing shares in America like Amazon, Apple, Coca Cola, and Netflix to just name a few.
The bad part? It seems pretty damn difficult to find out where we can buy these shares. So difficult in fact, that most people turn to CFD’s which I don’t really like. When I invest, I like to own a piece of the company, which is something you don’t get when you buy CFDs.
What I didn’t know before doing my research was that there are a TON of U.S based online trading platforms in the United States that will accept foreign applications, including South Africans! And the best part? They’re actually a lot easier to open compared to South African trading platforms, you won’t even need to FICA it or anything like that.
Here’s how I started trading foreign stocks from South Africa in 3 easy steps.
- Open a U.S based trading account that allows South African applicants. (I use Firstrade.) This step will take the longest, however once done, it’s done for good!
- Fund your account. Most trading platforms in the U.S can only be funded through wire transfer, so it will take a few days. But more on this later in the article.
- Start buying your favorite American shares. Like Amazon! I’ve been dying to get my hands on some.
IMPORTANT: Just to be clear I am no way affiliated with Firstrade and I don’t get any money for referring you to them. I’m simply letting you know which trading platform I prefer to use.
Here’s what you’ll need before getting started:
As always there are some documents you’ll need when registering with a trading platform.
- Some simple personal details. Like your name, address etc.
- A photocopy of your passport. Or you can simply take a picture of it with your smartphone. Make sure the quality is good though.
- A valid online banking account in South Africa. In this example I will be using FNB.
- A valid phone number that can be verified.
Ready to get started? Let’s dive into the details step-by-step
Step 01. Open A Firstrade International Account
- First, follow this link to get to the Firstrade website.
- The next step is to click on “open an account,” under the international section in the red box as shown in the image below.
- In the next screen, fill out your name and email address, then select “open international account” as shown in the image below.
You’ll be taken to this screen shown below to capture your mobile number. South African phone number code is +27.
- Insert your mobile number then click “Get verification code.” Make sure you use the correct mobile number because you’ll have to verify it via sms on the spot.
- Check your phone for the verification code, it should come through almost instantly.
- Insert verification code and then click on “continue.”
- Select your country below, then click on next.
- Upload passport. American passports have a different signature page which is why they ask for two images. The South African passport “signature page” is on the same page as your passport number and photo. So all you need to do is upload a copy of that page in both areas.
- Once you uploaded your passport, click on “SAVE, NEXT.”
- Notes on “additional info.” When providing your personal details you’ll notice that it will ask for an international tax number. I simply used my I.D number there and it seemed to go through fine.
- Done! After you’ve uploaded all your info, then you’ll get to a congratulations page with your account number. This is the account number you’ll use as a reference later when you fund your account.
NOTE: It took only around two hours for my account to be reviewed and fully activated. However they state that this could take up to 1 business day.
You won’t be able to fund your account while you wait for activation, however, I recommend you log in and browse around, maybe even add a few stocks on your watchlist so long. So that by the time your account is fully activated you can start trading as soon as possible.
Step 02. Fund Your Firstrade Account With Online Banking
Ready to fund your account? let’s get started! In this section I’ll be using my FNB account so if you are with FNB then you’re in luck! If not, the process shouldn’t be too much different. Look for similar settings and if you still struggle, call your bank rep, they should be able to help you out fairly quickly.
Find Firstrades international banking details.
First you need to go into your Firstrade account, and get their banking details for the wire transfer. I’ll show the details in an image below, however, this might change in the future so MAKE SURE you find their bank details within your account yourself.
- Log in to your Firstrade account with this link.
- Under the accounts menu at the top left, click on deposit/transfer.
- Under “cash transfer,” click on “select type. *Shown in the red square below.
- Select “wire transfer.”
- Select international to the right of “VIEWS.” *Shown in the red square below.
Now that you have their international banking details, it’s time to add them as a beneficiary in your South African bank account so that you can send the money over.
Add Firstrade as a beneficiary on your South African bank account.
This step is a bit long-winded, however, it will only need to be done once. As mentioned before, in the example I’ll be using FNB, however any bank is capable of paying into an international bank.
- Log in to your online banking or FNB mobile app.
- Once you’re in, click on the main menu and select the “Forex” button.
- Click on “add a beneficiary” at the bottom right of your screen. Then choose “business.”
- Fill out the details of the company, and NOT the bank they use. This confused me at first. The bank details will be “captured” below. You’ll find all these details under the Firstrade international banking details you got above.
- Click on “capture” below. Then fill in the provided account number and swift code that Firstrade provided. You’ll see that this will pull the company information of the bank that they bank with back to the “add beneficiary screen.”
- Beneficiary alias. Here you can just add your Firstrade account number that has 8 digits, followed by your full name. Your account number can be found at the Firstrade home screen. This is so that they can track your payment.
- Once done, review the details, submit it then approve it.
- Now you’re free to send money to this beneficiary.
Pay the beneficiary you just added.
TOP TIP: Send a small amount of money to make sure that you set up the beneficiary correctly. Once the money shows up in your Firstrade account, then you can send the rest through. This will avoid sleepless nights!
Here’s how you can send money over.
- Next to the beneficiary, simply click on “pay.”
- Remember to use your First trade account number followed by your full name as the reference. For example “91451838 Kalwyn Claassen”
- Under charge details, select “OUR.” This simply means that only you will be charged for this transfer and not the trading platform.
- You’ll be asked to indicate the nature of the payment. Choose “foreign investment” and then select “shares.”
- Select confirm, review the details then accept the details if you’re happy.
You should be good to go. Just keep in mind that it will take a few days for the money to show up into your Firstrade account. If you have any questions about your payment, you could also contact Firstrade customer service.
03. Start Trading
Once your money finally reflects in your Firstrade account then you’ll be free to trade any stock in the United States which is amazing.
I understand that most of you will be fairly new to the platform, so I’ll go ahead and link to some of the more popular stocks that you can buy on their platform to make things a bit easier for you.
IMPORTANT: You need to be logged into your Firstrade account for the links below to work.
Here’s some exciting American stocks you’ll have access to right here in South Africa:
Why Not Go With CFD’s?
During your research you would have come across a lot of websites offering you CFD’s, (contract for difference.) In plain old English, a CFD is a contract between you and usually a trading platform betting on a price of a particular stock. The price of a CFD simply follows the ticker price of a stock you chose.
So when you buy a CFD, you buy into an agreement between yourself and broker, you’re not actually buying the company or asset. That being said, you don’t get any dividends or other shareholder benefits with CFD’s, which is why I don’t personally like them.
I tried to explain the process as best as I possibly could using words and pictures. If I didn’t explain anything clearly, PLEASE leave a comment below and I’ll help you with that step. I might even make a video explaining the process if you would prefer that? Let me know below!