What Is the Nasdaq?
The Nasdaq, or the National Association of Securities Dealers Automatic Quotation System, is one of the world's largest stock exchanges that provides a range of opportunities for investors. Based in the US and founded in 1971, it lists over 3,000 stocks from more than 200 countries around the world. The exchange also offers a range of ETFs (Exchange Traded Funds) that track certain sectors or markets within those indices. Investors in the UK may choose to invest in the NASDAQ, a popular stock exchange for technology companies, in addition to the New York Stock Exchange
Different ways to invest in the Nasdaq
You got two main options to do so;
1. Invest in the shares included in the Nasdaq
Investors can invest directly in the shares of individual companies listed on the Nasdaq through the investment platforms, it is the most common way to do so.
To do this, you will need to open a brokerage account with a broker that supports trading US stocks. Depending on your broker, you may also have access to research and analysis tools to help you make informed decisions when selecting stocks.
2. Trade or invest in Nasdaq 100 ETFs
Exchange-traded funds (ETFs) are one of the easiest ways to invest in Nasdaq from the UK. An ETF tracks a basket of securities within an index like the Nasdaq 100 and trades just like any other stock. Investing in NASDAQ ETFs can be a great way to gain exposure to a diverse range of companies in the technology and innovation sectors. However, before investing, it's important to consider the foreign exchange fee that may be incurred when purchasing shares in a foreign currency. It's also important to be aware of the market hours of the exchange where the ETF is traded, as this may impact the timing of your trades and the liquidity of the market. Despite these considerations, NASDAQ ETFs can be a convenient and cost-effective way to invest in a broad range of companies in this dynamic and growing sector, providing diversification and potentially higher returns over the long-term.
For example, the Invesco EQQQ Nasdaq 100 UCITS ETF directly tracks and replicates the Nasdaq 100 and can be traded on the London Stock Exchange. In fact, Investors in the UK can access the NASDAQ stock exchange, which is known for its technology-focused companies and has historically provided strong returns for those willing to invest in the high-growth sector.
The Nasdaq Composite Index is a popular benchmark for investors interested in technology stocks, as it tracks the performance of over 3,000 companies listed on the Nasdaq Stock Market. With a market capitalisation of over $20 trillion, the Nasdaq Composite is one of the largest and most valuable indices in the world. For investors from outside the US looking to invest in the Nasdaq Composite, it's important to factor in foreign exchange fees and currency fluctuations, as they can have a significant impact on returns. However, with the potential for strong growth in the tech sector and the broad exposure to a diverse range of companies, the Nasdaq Composite can be an attractive investment option for those willing to take on some additional risk.
When thinking about investing in the Nasdaq, it is important to understand the difference between two of its most popular indices: The Nasdaq 100 and the Nasdaq Composite.
The Nasdaq 100 Index tracks the performance of the 100 largest non-financial companies listed on the exchange including tech giants such as Apple, Microsoft, and Amazon. It is represented as NDX.
The Nasdaq Composite, on the other hand, tracks the performance of all stocks listed on the exchange including both financial and non-financial companies. It is represented as IXIC.
How to Invest in Nasdaq: A Step-By-Step Guide
So far, we’ve looked at why you should consider investing in the Nasdaq, but how can you go on about it? Here is a 5-step guide to help you get started:
I. Set up a brokerage account. The first step for investing in Nasdaq from the UK is to open a brokerage account with an online broker. Brokers typically charge a commission fee for each trade and may also have additional fees such as account maintenance or inactivity fees. Thus, it’s important to compare different brokers before choosing one.
II. Do your research. Once you have opened your brokerage account, you can start researching companies listed on the Nasdaq. This includes looking at their financial performance, getting an understanding of the industry they’re in, and analyzing any potential risks associated with the investment. There are over 3,000 stocks listed on the Nasdaq and some of them are listed below:
Facebook (FB)
Microsoft (MSFT)
Netflix (NFLX)
Tesla (TSLA)
Alphabet (GOOG, GOOGL)
Amazon (AMZN)
Apple (AAPL)
eBay (EBAY)
III. Decide how much you would like to invest. You should also decide how much you want to invest in each company and set limits for when to buy and sell. This could be a percentage of your overall portfolio or a dollar value.
IV. Place your order. Once you’ve done your research and decided on the amount you want to invest in, you can place an order on the broker’s trading platform.
V. Monitor your investment. Finally, once you have placed your order, it is important to monitor your investments closely so that you can make informed decisions about when to buy or sell. You should also be aware of any news or events that could affect the performance of the companies you're investing in.
Is the Nasdaq a Good Investment Choice?
Investing in the Nasdaq can be an attractive option for UK investors looking for exposure to some of the world’s biggest tech companies such as Apple, Microsoft, or Amazon. It can also provide diversification benefits by adding exposure to other sectors and markets that are not available on the London Stock Exchange. The market has a long track record of success and offers access to growth potential which is not quite available on the London Stock Exchange. Investing in NASDAQ can be a viable option for those looking to diversify their portfolio, but for those specifically seeking to invest £5,000 in the UK, there are several avenues to consider such as stocks, bonds, mutual funds or exchange-traded funds (ETFs). Moreover, Investors from the UK can track the performance of the US stock market and gain exposure to leading American companies by investing in the Dow Jones Industrial Average, which is one of the most widely followed and respected benchmarks of the US stock market.
