Investing in German stocks is easy in today's international capital markets. You have a number of choices. You may buy shares of stocks that form the DAX Index (an index of 30 major stocks that trade on the Frankfurt stock exchange); a German company's American Depositary Receipts that trade on the New York Stock Exchange; or shares of stock traded on German exchanges.
- Skill level:
Invest in the DAX Index, The easiest and most common way to invest in German stocks is to buy shares in the DAX Index. The DAX Index is a blue chip stock market index composed of 30 major German companies that trade on the Frankfurt Stock Exchange. By owning shares of DAX Index stocks, you effectively own shares in some of the biggest companies in Germany, and the performance of your investment will broadly reflect the overall performance of the German economy.
Invest in German stocks by owning American Depositary Receipts of German companies that trade just like any other stock on the New York Stock Exchange. An ADR share is really just like a share in the actual German company as far as price goes. Any price difference between the German market closing price and the U.S. market opening price is always worked out in the after-market trading process so that the price of the ADR reflects current market value.
Invest in German stocks on the actual German exchanges. It is possible to have your brokerage house act as your proxy to buy and sell shares of German companies trading on the various German exchanges, but this is a much more expensive option as there are extra fees associated with trading on foreign exchanges. Special software is required to trade online. Along with financial institutions, it is mostly professional investors---and relatively few individual investors---who trade stocks on the foreign exchanges.
Investing in German stocks
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