Ask Colin

What are your thoughts on investing directly in the US stock market?

I have not read either of the two publications you mention. Also, I am not an expert in this area, so my first instinct was to decline to address your question. While, I am not equipped to answer it, I do have some things I can say about the problem you raise.

1. There is an even bigger problem than taxation and that is currency risk.

2. Direct investment will also involve custody costs, which may more than offset the lower transaction costs.

3. Unless you have large funds, I suspect that it is not worth the trouble and you would be better to invest through a fund manager and let the manager deal with some of the tax and custody issues.

4. Overseas investment is really justified on two grounds. Firstly diversification. Secondly, hedging liabilities in other currencies.

I suggest that you need to work out with a professional adviser whether you need an exposure to the US share market and how is the best way to implement it. Unless you have very substantial funds for investment, I suspect you are better to use a fund manager. However, I am not really equipped to advise you here. This is simply my uninformed opinion and you need to seek professional advice in what is a very complex area.

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