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How can I trade foreign stocks?

October 15, 2012: 6:30 AM ET

Can I open an account with a U.S. broker to buy stocks and bonds that trade in other countries?

—Ric

Yes. Two brokerages that make it especially easy are Fidelity and E*Trade. At Fidelity, for example, you can trade on exchanges in 17 countries, from Belgium to Singapore. Buying local, though, has drawbacks. Commissions in some places are high, and you could also face currency-conversion fees of up to 1%. Foreign companies aren't subject to U.S. financial disclosure rules, and local taxes on foreign-paid dividends can be a hassle.

A simpler alternative is to buy one of the 400 or so American depositary receipts that trade on U.S. exchanges. ADRs hold shares of foreign firms, and you can buy and sell (and collect dividends) in dollars.

— Donovan X. Ramsey

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