How to Buy US Stocks

As the world’s biggest stock market, the US offers a huge array of stock titles. From strong brands and faithful dividend payers like Coca-Cola and McDonalds to tech giants like Google and Microsoft, US stocks are very popular with Swiss investors. This guide gives you the most important information about how to invest in US stocks.

How can I buy US stocks?

The conventional way to buy shares in US companies is to open a custody account at a bank, and have the bank buy the shares you want for you. But in most cases, you are better off opening a stock brokerage account from a bank that specializes in online trading, because the brokerage and custody fees are typically much lower. You can find a comprehensive comparison of Swiss stock brokerage accounts here.

It is also possible to buy US stocks using a neobank account, which you can open online through an app. Two Swiss neobanks, Neon and Yuh, both give you the option of buying certain US stocks. Neobanks are particularly interesting if you only want to invest a small amount of money at any one time.

On which stock exchanges are US stocks traded?

Swiss stock brokerage accounts generally let you buy us stocks listed on the New York Stock Exchange (NYSE) and the Nasdaq directly from the US exchange where they have their primary listings. Swiss banks and online brokers often also give you the option of buying US stocks on secondary exchanges like the Xetra, the London Stock Exchange, or the SIX Swiss Exchange.

Swiss neobanks do not give you the option of choosing which stock exchange you want to use. Instead, your orders are channeled to a specialized stock exchange (BX Swiss, in the case of Neon).

Which investment costs apply to buying US shares?

When you buy or sell shares, your bank charges you brokerage fees. How much you have to pay depends on which bank you use, the size of the transaction, and which stock exchange you use for the trade. If you want to invest just several hundred francs at a time in US stocks, then the neobanks Yuh and Neon are the cheapest because they do not charge a minimum fee. Otherwise, online trading platforms from Swiss banks are often the cheapest solution.

In addition to brokerage fees, you also have to pay the Swiss stamp duty of 0.15 percent when you buy shares in US stocks.  

Swiss banks and stock brokers not only charge brokerage fees, but most also charge custody fees as well. Normally, the custody fees are the same regardless of which country your stocks are from. But there are a few Swiss banks that charge higher custody fees for foreign stocks in your account. That is why it is important to account for custody fees as well as brokerage fees when choosing a bank.

The following table shows the five Swiss banks with the lowest costs for buying and selling US stocks on US stock exchanges.

Table 1: The five cheapest Swiss banks for investing USD 1000 in US stocks

Costs are calculated based on a purchase of USD 1000 worth of shares in a US stock (Price per share: USD 100). Custody fees are calculated based on a custody account balance of USD 10,000 and include value-added tax. Costs in USD are converted at the rate of CHF 0.90 per USD 1.00.

The table below includes two neobanks with which you can invest in US stocks. As the table shows, Neobanks are much cheaper than online trading platforms for small transactions. You also are not charged any custody fees. However, these neobanks only offer a limited selection of stocks, and trading tools and features are also very limited.

Table 2: The cost of investing USD 1000 in US stocks with Swiss neobanks

*An additional currency conversion fee of 0.95 percent applies. The cost shown here does not account for Swiss stamp duties.

Are there any other costs?

If you as a Swiss investor buy US stocks that are denominated in US dollars, which is normally the case, then you have to account for currency exchange costs. Exchanging francs to dollars and back can cost you a lot of money, especially when you invest larger amounts.

When you trade US stocks, you also pay US stock exchange fees and certain US taxes, but these are relatively low. With some Swiss banks, these additional US taxes are already accounted for in the brokerage fee.

Can I receive US stock dividends as a Swiss investor?

Many US companies are reliable dividend stocks. In contrast to Swiss companies, most US companies distribute shareholder dividends on a quarterly basis, and some even pay out dividends monthly.

Dividend payments from US companies are transferred to your stock brokerage account. Unless your account is denominated in US dollars, your bank will normally exchange the money into Swiss francs. Dividend payments and other corporate actions are normally processed by your Swiss bank at no extra cost.

Do I have to pay taxes on dividends and capital gains?

As with all stocks, you normally do not pay taxes on capital gains as a private investor, but the shareholder dividends you receive are subject to Swiss income taxes. As a Swiss investor, the gross dividends you receive from US stocks are subject to a US withholding tax. This is normally 30 percent of each dividend payment. You can reclaim part of the withholding tax via your Swiss tax return.

What are the biggest risks of investing in US stocks?

The same rule applies to US stocks as applies to all other stocks. Investments in individual companies bear a high risk of loss, and stock prices can fall sharply. In the worst case, your shares can become worthless. That is why it makes more sense to spread out your investment capital across many different stocks. A simple way to do this is to buy shares in affordable exchange-traded funds (ETFs) which, in turn, invest in many different American stocks.

Are there other ways to invest in US companies?

An alternative to buying shares in individual companies is to buy shares in ETFs or index funds that broadly invest in the US stock market. There are also many actively managed mutual funds that invest in US companies, but these are typically more expensive than passively managed ETFs and index funds. You can also invest in US stocks using a fund savings plan, a robo advisor, or an asset management service.

If you have a high risk tolerance and a thorough knowledge of stock trading, you can also make use of numerous derivatives and structured products based on US stocks. Examples include options, futures, and certificates. However, these products are not suitable for inexperienced investors, as the risk of losing money is very high.

More on this topic:
Compare Swiss stock brokerage accounts now
The costs of investing in stocks explained
Useful tips for investing in stocks