No matter what your personal finance philosophy might be, there is no denying the fact that if you want to grow your money, you need to invest it wisely. The best investment method depends on numerous factors such as the amount of money you are able to invest, the level of risk you are comfortable taking on and how soon you wish to reap your returns on investment. One of the most popular investment methods is easily stock market investment due to the low barriers of entry - there is no minimum investment required nor do you need extensive economic knowledge to get started. Luckily, even complete beginners to investment can find plentiful information and advice freely available on the internet; unfortunately, not a lot of this information is geared towards investment in Sri Lanka, but more towards investing in Wall Street.
If you have ever wondered how you can invest in Wall Street from Sri Lanka - look no further. Here is a brief overview on how you can get started today.
What is Wall Street?
Wall Street is more than just the name of a city in New York - it symbolises all the financial companies and markets that are housed in this eponymous place. Wall Street can be considered an umbrella term to refer to all the brokerage firms and investment banks that deal with the New York Stock Exchange, NASDAQ and other major stock exchanges in the United States. Therefore, when someone talks about “investing in Wall Street”, they are most likely talking about buying and selling shares within this massive financial network. Luckily, Wall Street allows non-US citizens to invest as well which opens up their doors to the rest of the world.
Why should I invest in Wall Street?
If you feel doubtful about whether you should invest your money in a foreign marketplace, keep in mind that the returns on Wall Street are generally much higher than local investments. These stock exchanges carry the shares of major global entities (think Google, Apple, Walmart, Tesla etc.) and trade in the US dollar, which is one of the strongest currencies in the world. Even a minimal growth in these markets will translate into amazing payoffs for retail investors especially in third world countries like Sri Lanka.
What are the different ways to invest in Wall Street?
There are multiple ways of investing in Wall Street. Like in Sri Lanka, investors are able to invest in government bonds, company shares and other types of instruments. The most popular method (and the one we will be looking at in this article) is buying and selling company shares.
Investing in Wall Street from Sri Lanka
While in the past, investing in the stock market was seen as a very complex financial transaction that involved an investment bank and an assigned stock broker, advancements in FinTech have removed almost all the barriers of entry. Complete newcomers to retail investing can simply download a mobile app, register and start buying and selling their chosen company shares. While they still need to select a brokerage firm as a formality, retail investors no longer need to route their trades through a stock broker. This means you can buy and sell shares in real time without waiting for someone else to make the trades on your behalf. That being said, it was not the case for Sri Lankan investors to trade in international stock markets like NYSE or NASDAQ until very recently.
Sri Lankans who wish to invest in Wall Street still only have very few options to choose from. In fact, the most popular option for retail investors is Ustocktrade.
Ustocktrade is a mobile app that specifically allows Sri Lankans to directly invest in Wall Street. The first app of its kind, Ustocktrade was developed by Tony Weerasinghe, a leader in technological innovation in Sri Lanka. It currently works in tandem with Sampath Bank which means users need to have a personal foreign currency account (PFCA) in USD as well as online banking facilities to manage the investment remittance. After registering on Ustocktrade, retail investors can transfer money to it and directly start buying and selling shares, equity securities, Exchange Traded Funds (ETFs) and Exchange Traded Notes (ETNs) listed on U.S. stock exchanges. Ustocktrade charges USD 1 per trade as well as a USD 5 monthly membership fee. Ustocktrade also offers an investment simulator where you can try your hand with investing virtual cash and checking potential returns before investing actual money.
Foreign Currency Requirement
A few things you need to know before you get started is that since trading on Wall Street can currently only be done in US dollars, you would need a source of acquiring this foreign currency. This means that you cannot convert LKR to USD - but you need to directly get foreign remittance to your hand in order to begin trading. If you are working for foreign clients or have foreign contacts who can directly send you dollars, this won’t be an issue - but if you have no source of foreign income, you might face a roadblock here.
While trading on Wall Street might not be the first option you ought to look at when you begin your foray into retail investing, it is definitely one avenue that can generate very high returns. Now that it has become possible to invest in Wall Street from Sri Lanka, it’s very worthwhile to consider looking at it as a viable investment instrument.