IT IS possible to purchase stocks on the United States stock exchange right here in Jamaica. You have at least two options here.
First, there are 10 stockbrokerages all of which have links with U.S. brokerages. The process of trading is not a complex one as some of these local brokerages link you online with their international connections.
You may choose, on the other hand, to go the route of investing online directly from the comfort of your home, using well-known online brokerage organisations such as Ameritrade.
You can do your own trading electronically. And some brokerages offer you a limited number of free trades.Will you have enough information to guide your trading? The answer is yes, if you are prepared to do the research necessary.
There is a lot of information available on several highly credible sites and channels including CBS Market Watch, CNNFN, Bloomberg, and CBNBC and in magazines and newspapers such as Fortune, BusinessWeek, Forbes, SmartMoney, the Wall Street Journal and the Financial Times. These are all accessible or available locally.
Now on to the question of taxation.
Taxes are withheld on dividends at source so there would not be a need to file returns with the IRS unless one is a US citizen resident in Jamaica. We recently reviewed returns on an online account which showed US$3.9 withheld on dividends of US$29.03 which works out to a taxation rate of 13.43 per cent.
It is important that you have a sound reason for buying US stocks. Undoubtedly one of the better reasons would be for diversification purposes.
Bear in mind, however, that prior to last year (when the local JSE index declined by 8.37 per cent) our local market had been among the world's best performers for the previous four years.
A word of caution. Investing in the global capital market is a technical activity not to be undertaken on a whim. These markets are accessed and traded daily by millions of savvy, experienced and wealthy investors, analysts, dealers and financial planners worldwide. It is not a place for neophytes. Either prepare yourself properly or consult a licensed financial adviser first.
Hopeton Morrison is general manager of St. Thomas Cooperative Credit Union Ltd. and lecturer in the School of Business Administration at the University of Technology. Please send comments and questions to: hmorrison@stccu.com.
