There are two main ways to invest in the US Stock Market from Africa.
You can either do it yourself (DIY) invest. For this, you need to find an online brokerage firm that will accept you based on your country of residence.
This is easy if you live in many of the more developed countries in Africa.
It isn’t as easy if you live in some poorer ones, or indeed you are an expat that wants to move from country to country.
In that case, the chances of a brokerage accepting, and keeping your account open if you do continuously move, is smaller.
One of my associates opened up a DIY account when he lived in South Africa.
He works for an NGO. When he moved to the Ivory Coast and then onto Ethiopia, he was told that his account would be closed by his brokerage, as they didn’t support the countries in question.
Anyway, if you do find a DIY brokerage that can accept you, you need to fill out an online application form and give anti-money laundering documents like proof of address and ID.
Then the hardest part comes….you need to trade the instruments you want.
This is where most people struggle long-term. The Vanguard group have done numerous studies where they compare how DIY investors do when investing in Vanguard ETFs and funds vs those that go into the funds via an advisor.
They have found that even where the same funds are used, advisors can add significantly to the client’s net returns:
One big reason for the above is emotions. As the chart below shows, the average investor trails the market by a considerable amount:
An estimated 35% of DIY investors panic sold during the 2020 market falls.
You only have to look at all the panicked questions on Quora to see that 35% might be even an understatement!
If you feel you can control your emotions long-term, which is something maybe 20% of people can do in reality, try DIY.
If not, find an advisor who can accept for the country in Africa you live in.
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