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Samsung phones, TVs, laptops and appliances are easy to find and purchase right here in the USA.
Samsung stock, not so much: Because it’s a foreign company, American investors can't buy Samsung stock shares the way they typically buy stock — through major U.S. exchanges like the Nasdaq and NYSE.
Individual shares of Samsung stock must be purchased either over-the-counter as a "pink sheet" stock — which means your purchase isn't regulated — or on the Korea Exchange (KRX), which entails opening a South Korean brokerage account.
There’s also a third way: You can buy Samsung stock through an exchange-traded fund. We’ll talk more about that later.
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1. Study up on Samsung
Even though Samsung stock is not easy to buy in the U.S., news about the company is in ample supply. Because of the company’s high-profile, publicly traded competitors, there’s a steady stream of headlines and analyst reports that refer to Samsung and the various industries in which it operates.
So do your homework. Spend time doing both quantitative research (reviewing things such as earnings, net income and revenue) and qualitative research (looking at management, how the company is making money, and evaluating the competition — including Apple).
During your research, you’ll probably learn that for U.S. investors, one common path to Samsung stock ownership is to buy shares in a South Korea-focused ETF.
Like a mutual fund, an ETF is a single investment that holds a variety pack of stocks that all share some common trait, such as industry type, market cap or country of origin.
There are a handful of ETFs that count Samsung among their major holdings. Even though Samsung is just one of many stocks held in an ETF, your exposure to the company may not be as watered down as you might think: In some ETFs that invest in South Korean companies, a single holding like Samsung can make up 20% or more of the fund’s total value.
» Interested in one of these funds? You can buy them through a broker that offers ETFs.
2. Figure out how Samsung fits in with your investing goals
Once you’ve done your studying, start thinking about how Samsung stock fits in with the rest of your investment portfolio. A first step here is understanding the difference between an ETF and a stock.
Although ETFs trade just like stocks via individual shares, their mutual fund-like traits require taking a slightly different approach to analyzing whether they should have a place in your portfolio.
Because the holdings are curated, there is a management fee, which is called an expense ratio, to consider and compare with the competition. International ETFs are often more expensive, but generally speaking, it’s wise to look for funds with expense ratios of 0.50% or less.
Also, take a look at the ETF’s holdings to be sure that the investments adhere to your investment objective. In this case, check that the Korea-focused ETF you choose has a meaningful weighting in Samsung stock. Here’s more on how ETFs work.
A lot of this research is easy to do via your brokerage's website, or through an independent research firm like Morningstar.
3. Decide on a budget
At first blush, this may seem like a simple decision based on share price and how much cash you have to purchase a stock or ETF. But it’s actually more about your investment strategy, specifically how much exposure to any single type of investment you’re comfortable having in your portfolio.
How the amount of your investment will affect the balance of your portfolio. Although ETFs are inherently diversified due to the number of holdings, a narrow investment focus — such as one that concentrates solely on large and medium-sized Korean technology companies — can make for a poorly diversified portfolio. Be careful not to overexpose yourself to this or any other single, concentrated space.
Your short-term goals. The stock market is considered a proven long-term investment. There are other options for short-term savings, when you want to preserve your money rather than grow it. You should also consider whether you have enough cash saved in your emergency fund before investing. Financial advisors often suggest having enough to cover three to six months of living expenses.
Your future investment plan. You can make regular investments over time with dollar-cost averaging, a strategy that helps ensure you don’t sink all your money into the market when prices are high. You can always invest in Samsung later; there's no need to invest all of your money at once.
Disclosure: The author held no positions in the aforementioned securities at the original time of publication.