How to Invest in Japanese Stocks
The Japanese stock market is the world's second largest by market capitalization after the U.S. The stocks of many companies well known to U.S. investors trade in Japan. Exchange traded funds--ETFs--provide investment access to a range of stocks in a specific country, including Japan, with a single investment. Using ETFs is the most efficient way to invest in Japanese stocks.
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Instructions
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Open and fund an online stock brokerage account if you do not already have an account. Smart Money magazine provides an annual broker survey to rank the online brokers. The magazine's 2010 Broker Survey is linked below. The three top rated brokers are Fidelity, E-Trade and TD Ameritrade.
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Look up the current share price of several Japan-focused ETFs. The iShares MSCI Japan Fund, symbol, EWJ, is the largest, most active Japanese ETF. For small company Japanese market exposure look at the iShares MSCI Japan Small Cap Indes Fund, symbol SCJ.
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Select which Japanese ETF fits your investment goal and determine the number of shares you want to buy. EWJ holds stock of companies like Toyota, Mitsubishi, Honda and Canon. SCJ invests in smaller companies with names generally not known in the U.S.
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Use the broker's online trade order screen to buy the ETF shares. Broker orders are placed using the stock symbol and number of shares to be purchased. The actual purchase price will be known when the trade is completed. The trade screen will show the current bid and ask price for the ETF and you should get the ask price.
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Tips & Warnings
Use ETFs to invest in foreign stock markets. They are efficient and provide broad market exposure in a single investment.
Check out the price chart before investing in ETF shares. If the share price is in a down trend, wait for a bottom and upwards turn before investing.
Investing in foreign stock markets subjects your investment to currency exchange risk as well as stock market risk.
It is possible to lose money investing in any stock or ETF so do your own research before investing.
References
Resources
- Photo Credit Japan image by Angelika Bentin from Fotolia.com
