UK Investors Can Now Buy Individual US Stocks Through Fidelity's CDI Service

Investing in US stocks from the UK offers access to some of the world's largest and most well-known companies, spanning sectors such as technology, healthcare, consumer goods, and financial services. Fidelity allows eligible UK investors to buy and hold shares in individual US companies through CREST Depository Interests (CDIs), which are essentially a way for UK investors to purchase shares listed on overseas markets, like the New York Stock Exchange or Nasdaq.

However, investing in US shares comes with an additional layer of risk due to currency movements. The price of US shares is usually converted into British pounds at the current exchange rate, which means changes in the pound's value against the dollar can impact investment returns. For example, a US share may rise in value in dollar terms but experience a lower return in sterling if the pound strengthens.

Before investing, it's essential to understand the costs involved, including dealing charges and foreign exchange fees. Additionally, UK investors who receive dividend payments from US shares will need to complete a W-8BEN form with their investment provider to take advantage of the reduced withholding tax rate. Fidelity offers this service online.

It's crucial for investors to understand that investing in US shares can be complex and requires careful consideration of various factors, including currency movements, dealing costs, and tax rules. Those who prefer not to select individual companies can opt for funds or ETFs as a way to gain exposure to the US market while spreading risk across many businesses.