Investing in Foreign Stocks - A Practical Roadmap for Vietnamese Investors

The U.S. stock market is not as difficult to access as many people imagine. With over 6,300 traded symbols on NYSE and Nasdaq, this is the largest investment ecosystem worldwide. Leading companies like Apple, Tesla, Amazon are all concentrated here, attracting capital from around the globe. So why should Vietnamese investors consider buying foreign stocks, especially the U.S. market?

Why Is the U.S. Market More Attractive Than Domestic Stocks?

Returns more than double the VNIndex

The S&P 500 has increased by over 39% from May 2018 to now, while the VNIndex has decreased by about 9% during the same period. In fact, the Nasdaq index has surpassed 64% thanks to the explosive growth of tech companies. This clearly shows the gap between the two markets.

Portfolio diversification

Investing in U.S. stocks means you have the opportunity to own a part of global tech giants, retail, or financial companies. Not just buying Apple or Amazon, but participating in the growth of developed economies.

Minimize systemic risk

When the Vietnamese economy faces pressure from rising interest rates and VND depreciation, diversifying assets into other markets can help protect your finances more effectively. This is not a risky choice but a reasonable hedging strategy.

Top 10 Notable U.S. Stocks

If you’re looking for a starting point to buy foreign stocks, this list will help guide you:

Note: Data fluctuates over time, for reference only.

Two Main Ways to Buy Foreign Stocks from Vietnam

Vietnamese individual investors cannot directly open accounts on NYSE or Nasdaq without U.S. citizenship. However, there are two popular derivative tools that help you access the market.

Method 1: ETF - Simple, Safe, Long-term

ETF (Exchange Traded Fund) operates like a pre-designed basket of stocks, closely tracking indices like the S&P 500. You own many stocks at once, reducing concentration risk.

Main benefits:

• Low transaction costs, minimal management fees
• No need to deeply understand each specific stock
• Automatic diversification
• Limit the impact of extreme price volatility

Famous S&P 500 tracking ETFs include: Vanguard S&P 500 ETF (VOO), SPDR S&P 500 ETF (SPY), iShares Core S&P 500 ETF (IVV).

Method 2: CFD - Flexible, High Risk, High Return

CFD (Contract for Difference) allows you to trade individual stocks without actually owning them. You invest in price movements, potentially profiting from both upward and downward trends.

Outstanding advantages:

• High flexibility, trading outside regular hours
• Use leverage to amplify profits
• Ability to short sell, profit from falling prices
• Access to a variety of assets within one platform

U.S. Trading Platforms You Should Know

NYSE - The Old Guard

Founded in 1792, the New York Stock Exchange has witnessed the growth of the U.S. economy. Century-old companies and reputable “blue-chip” stocks are listed here. Market capitalization as of mid-2022 was nearly $24.6 trillion. Trading hours are from 9:30 AM to 4:00 PM, Monday to Friday.

NASDAQ - The Tech Playground

Started in 1971 as the first electronic market, Nasdaq has become a hub for tech companies, startups, and small-cap firms. Listing requirements here are less strict, so many speculative stocks with high risk but also high profit potential are traded.

Three Major U.S. Stock Indices

S&P 500 - A General Market Overview

Includes the top 500 companies, accounting for about 80% of the total market capitalization. This index is weighted by market cap, meaning each stock influences it proportionally to its size. It reflects the overall trend of the U.S. stock market.

Dow Jones - Symbol of the Giants

Comprises 30 of the largest, most influential companies. Dow Jones accounts for about 25% of the total market value. Unlike the S&P 500, it uses price weighting, so stocks with higher prices have a greater impact on the index fluctuations. Dow companies are known for paying regular, stable dividends.

NASDAQ Composite - A Reflection of Tech Sentiment

Includes all stocks traded on NASDAQ, mainly tech firms and some from other sectors. Since it covers small-cap and speculative stocks, this index provides a deeper insight into the tech sector’s performance and investor sentiment towards high-risk stocks.

5-Step Process to Buy Foreign Stocks

Step 1 - Register an Account

Choose a reputable trading platform, fill in your personal information in the registration form.

Step 2 - Find Opportunities

Use market analysis tools, economic calendars, and trading charts to identify the best entry points amid market fluctuations.

Step 3 - Deposit Margin Funds

Decide on the minimum amount (usually from $50 and suitable leverage based on your risk tolerance. Start with small capital if you’re a beginner.

Step 4 - Execute Trades

You can buy )long( when expecting prices to rise or sell short )short( if you anticipate a decline. This flexibility is a key advantage of CFDs.

Step 5 - Manage Positions

Regularly monitor account fluctuations, take profits when targets are reached, or cut losses promptly if the market moves against your expectations. Leverage amplifies both gains and losses, so discipline is crucial.

Psychological and Knowledge Preparation Before Starting

Choose a Trustworthy Broker

This is a decisive factor for your profits. A reputable broker provides good tools, technical support, and reasonable fees.

Learn Before Using Real Money

Most platforms offer demo accounts with virtual money )usually from $50,000(. Use it to familiarize yourself with the interface, strategies, and market feel.

Plan Your Finances Carefully

When confident enough, clearly define how much money you can invest, and the maximum leverage you can handle. Leverage is a double-edged sword—it amplifies both profits and losses.

Starting Your Journey in Buying Foreign Stocks

Access to the U.S. stock market is no longer exclusive to professional investors. With the development of derivative tools like ETFs and CFDs, individual investors from Vietnam can build international portfolios.

If you prefer long-term investing, ETFs are a suitable choice with low costs and controlled risks. Conversely, if you want quick gains, can tolerate high risks, and seek high returns, CFDs offer more opportunities.

The first step is to choose a reputable broker, thoroughly understand the trading tools, then practice on a demo account. When ready, start with small amounts, manage risks carefully, and gradually expand your portfolio. Success in buying foreign stocks is not about short-term profits but about long-term trading discipline. Wishing you success on your investment journey!