kiwichick
11-10-2015, 02:57 PM
I've been trying to find out the costs of investing in US shares directly. While US broker fees seem reasonable and comparable to NZ brokerage when you include wire transfer fees, the biggest issue appears to be the cost of foreign exchange.
I can find the exchange rates charged by banks to send international wires in US currency, but I can't find any information on the rates used when converting USD back to NZD via incoming international wire. I've just sent an email to Kiwibank to find out. If it's the same as their cash rates, then the FX costs of transferring a hypothetical US$10,000 there and back comes to a whopping NZ$1200, or about 8%! (0.6507 to convert to USD, 0.7063 to convert back to NZD). Granted you would hope to increase your investment a fair bit, but 4% conversion costs each way seems incredibly steep.
I understand you can use NZForex to cut the cost of foreign exchange, though at least with TD Ameritrade you need to send the initial wire transfer from a NZ bank account in your name. Afterwards they can assess payments from NZForex and decide to accept them or not (confirmed via recent email). Though I'm not sure how much you are actually saving and whether or not you can wire out from TD Ameritrade to NZForex. Does anyone have any experience with this?
I'd like to invest in big global companies like McDonalds, Coca-Cola, Google, Apple, IBM, Wal-Mart etc for the long term, but the fees involved just make me wonder if it's worth it.
So, considering all the costs involved, especially FX costs, do you think it's worth investing in US stocks?
I can find the exchange rates charged by banks to send international wires in US currency, but I can't find any information on the rates used when converting USD back to NZD via incoming international wire. I've just sent an email to Kiwibank to find out. If it's the same as their cash rates, then the FX costs of transferring a hypothetical US$10,000 there and back comes to a whopping NZ$1200, or about 8%! (0.6507 to convert to USD, 0.7063 to convert back to NZD). Granted you would hope to increase your investment a fair bit, but 4% conversion costs each way seems incredibly steep.
I understand you can use NZForex to cut the cost of foreign exchange, though at least with TD Ameritrade you need to send the initial wire transfer from a NZ bank account in your name. Afterwards they can assess payments from NZForex and decide to accept them or not (confirmed via recent email). Though I'm not sure how much you are actually saving and whether or not you can wire out from TD Ameritrade to NZForex. Does anyone have any experience with this?
I'd like to invest in big global companies like McDonalds, Coca-Cola, Google, Apple, IBM, Wal-Mart etc for the long term, but the fees involved just make me wonder if it's worth it.
So, considering all the costs involved, especially FX costs, do you think it's worth investing in US stocks?