Is Investing in Samsung Stocks a Wise Idea? How to Invest in Samsung Stocks
Samsung has grown over the years to become one of the biggest electronic devices brand. It deals with nearly all types of appliances such as phones, TVs, home appliances, and laptops. Samsung has a brand value of $62.3 billion ranks in the top five of the most valued brands. Samsung stocks can be ranked as blue chip, due to the stability, good management, and good sales of the company over the years. It is a good idea to consider investing in Samsung stocks. In this article, we shall see why Samsung Stock is a good investment option.
What is the Dominance of the Samsung in the Global Technology Market?
Samsung continues to dominate the smartphone network globally for the Android devices. In the third quarter of the 2020, Samsung made sales of 80.4 million units, taking a market share of 22.7%. Samsung dominates the US and the Indian markets with 24% and 30% respectively.
The company has hugely progressed with the 5G connectivity. It was approved by the Federal Communications Commission’s as the first company to produce 5G devices.
Why You Should Consider Investing in Samsung Stocks
Samsung is one of the world’s biggest brands in the technology sector. Because of its massive growth over the years and steady performance, it attracts a large pool of investors. In addition, the company has earned the status of a blue-chip, which means its stocks are highly valued. Here are reasons you should invest in Samsung stocks.
1.Samsung is a well-diversified giant company that operates in various industries to spread out the risks
2. Samsung ranks in the top five of the world’s valuable brands
3. Behind apple, Samsung is ranked at number two globally for electronic production by the size of the revenue.
4. In 2020, Samsung had the most smartphone sales, while apple came second.
5. Samsung is the pioneer and leading player in the 5G connectivity and the first electronic company to be approved by the FCC.
6. It is the second-biggest semi-conductor manufacturer. The market leader is intel.
7. Samsung is the market leader for Android devices, followed by Xiaomi.
How to Invest in Samsung Stocks
Trading in Samsung stocks in the US is not direct because it is a foreign brand. Therefore, an investor cannot buy the stocks like any other stock listed on the US exchanges such as NYSE or Nasdaq. You have to purchase the stocks from the Korea Exchange (KRX), by first opening a Korean brokerage account. Alternatively, you can buy the Samsung stocks over the counter, a method known as pink stock, which is not regulated. Another way you can buy the Samsung stocks is through the exchange traded fund. Here are steps to enable you purchase Samsung stocks:
1. Buying Shares on Korean Exchange (KRX)
If you are in America, you cannot buy Samsung stocks from the USA stocks exchange markets. To get the stocks, you have to purchase from KRX. Therefore, you need to open an account with the Korean brokerage firm of your choice. Also, you can invest directly without a brokerage. But first, you will need to obtain the investor registration certificate (IRC) which is issued by South Korea's Financial Supervisory Service.
You can then open a stock trading account at the Korean securities firm, whereby the funds and transferred and trading happens in the real time. The process of trading in Samsung stocks as foreigner at first is hectic, because you need to submit a lot of paper work such as proxy agreement, registration of signatures, investment ID application, the investors passport, and criteria for determination of non-Korean resident.
When you opt to trade with a brokerage firm, the process is much simpler. You only need to open an account, deposit the funds, and start trading with the help of the trader. You should know that the trade orders are limited and need to be mindful of the local trading hours.
2. Trading Through Pink Sheets or Grey Market
You can also buy the Samsung stocks on the grey market or pink sheets which are over the counter trade. The investors are paid the dividends on the platforms but they cannot have the voting rights. Investing through the pink sheets has some downsides such as, unloading shares is not as easy due to volume, and liquidity and the high bid-ask spreads.
Also, daily reporting is not in-depth thus you might lack on the transparency. If you consider trading with the pink sheets, you should use the limit orders rather than the market orders for proper accounting of the bid or ask spread disparity.
3. Investing in ETFs
Investing in Samsung stocks in ETF, is one of the best way to get exposure of the company. However, the investors should be willing to invest in platforms that feature other companies. But, because Samsung is such large company, its presence in the Korean ETFs is heavy. For instance, the iShares MSCI South Korea Capped ETF offers Samsung an exposure of up to 25%.
Tip for Investing in Samsung Stocks
Like any other investment, you require to have a strategy and the necessary information to make your trading successful. It is always necessary to ensure your investment aligns with your future financial goals, before buying any stocks.
Before, you start buying the Samsung stocks, here are things you should do:
1. Research Relevant Information on Samsung
There is good supply of information about Samsung from the internet. Samsung is a prominent company with high-profile competitors, so it is always making headlines and under the scrutiny of various financial analysts.
So, it is easy to find information about the company, both the qualitative and quantitative. Qualitative information you should look at include, evaluating the competitors of the company, looking at how the company earns its revenue, and the management structure of the company. Quantitative research about the company should touch on areas such as the revenue, the net income, and earnings of the company.
Researching on the company will help you to know when and how to buy the stocks. It will help you know the investment avenues available and the best ones.
2. Establish Whether Investing in Samsung Will Help You Accomplish Your Investment Goals
Before, investing your money on Samsung stocks, you should establish whether it will help you accomplish your investment goals. Investment in the stock should fit well with your other investment portfolio. You should understand the difference between the stocks and ETFs.
ETF trades are similar to stocks through the individual shares. However, they have the mutual fund features. You have to take a different approach in determining whether you should include them in your portfolio.
International ETFs are expensive and it is wise to look up for funds with less than 0.50% expense ratio. Consider the ETF holdings to ensure the investments fits your investment goal. Therefore, choose a Korean ETF that gives Samsung a heavy presence. Use the brokerage websites to get all the information you need in regard to investing Samsung stocks.
3. What is Your Budget?
Deciding on how much stocks you should buy should be based on your investment strategy. Rather than the price of the share or the amount of money you have set aside for the purchase of the shares. Therefore, you should consider factors such as:
· Your Short-Term Investment Goals
Stock investment is a long-term affair. Therefore, if you are looking for a quick or consistent income soon, you should consider other short-term investment options. Also, have enough emergency funds that will cover at least six months of your living expenses before you consider investing.
· Consider Future Investment Plans
The best way of investing in any stocks, is investing little by little over time using strategies such as dollar-cost averaging. The strategy ensures that you do not invest all your money at once, especially when the prices are high.
· How Will the Amount of Your Investment Affect Your Portfolio?
You should avoid narrow investment focus especially one that majors on large and medium-sized technology companies in Korea. Such an investment decision can result in a poorly diversified portfolio. Overexposure to only concentrated spaces can lead poor investment outcomes.
4. Get The Best Broker
Since your operating outside Korea, you need to get an efficient broker who will help you with handling trade in another region. Ensure the broker is legally authorized to deal with the local currency.
Samsung is a giant company that has been in the market for a long time. With its continued innovation, the company is here to stay. It shows promise of maintaining and improving its market dominance in the technology space. Therefore, taking up the Samsung stocks investment is a wise decision.
If you are intending to invest in Samsung stocks outside Korea, you must first understand all the risks involved. Take note of the legal and financial implications of putting your investments in another country. Also, talk to a professional financial advisor to help you in making the right choices before buying Samsung stocks.