The Easy Way to Invest in International Stocks
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If you are interested in investing in some stocks outside the United States, then there is an easy way for Americans to do so, using the ADR system. ADR - American Depositary Receipts - are a way of investing in a company abroad without having to actually send money out of the country, as such.
ADRs basically work like this: an American bank buys stock in an international company, and then you, the investor, can buy a share of their stocks, using American dollars and not having to pay a bunch of cross-border fees.
It’s important to know that ADRs come in three levels today, each having a different level of risk because in some levels, less information is required to be disclosed from the company’s end. A Level III ADR has the most information attached to it.
Of course, as with any stocks, there are risks that come with investing in ADRs, but some of these risks are different. Keep in mind that if the US dollar rises against the currency of the country where the stock originates, then the profits will be considerably lower. Other countries also might have higher risks from economic instability or inflation problems - so do your research before you buy.
Tags: currency
This entry was posted on Saturday, August 16th, 2008 at 3:09 am and is filed under Investing. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.
