Recently, many people have asked me about investing in U.S. stocks. To be honest, there are indeed many disadvantages to investing in U.S. stocks, especially for investors in Taiwan, where the pitfalls are quite numerous. I’ve decided to organize my observations over the years in hopes of helping everyone avoid detours.

First, let’s talk about the most direct issue—time difference. Taiwan and the U.S. are separated by 12 time zones. U.S. stock trading hours fall between 9:30 PM and 4:00 AM our time (winter: 10:30 PM to 5:00 AM), which is a nightmare for those wanting to do intraday trading. You have to stay up late to monitor the market, which consumes a lot of energy and stamina. However, there are solutions—using stop-loss orders, trailing stops, and other automated tools, setting conditions in advance so that trades can execute automatically without constant monitoring.

Next is the cost issue, which is also a very practical disadvantage of investing in U.S. stocks. Taiwanese investors mainly go through either local securities firms via cross-border agency trading or overseas brokers. With local brokers, commissions range from 0.1% to 1%, charged on both buy and sell, and some have minimum fee thresholds. Overseas brokers, although claiming zero commissions, have remittance costs—Firstrade, for example, charges $35 for deposits, and there are also withdrawal fees. With the Federal Reserve’s benchmark interest rates so high, brokerage financing interest rates have also risen, making leverage more expensive for investors.

Then there’s the language and information barrier. Company announcements, financial reports, and analysis documents from the U.S. stock market are almost all in English. For investors not fluent in English, this can lead to misunderstandings or even missing important opportunities. Moreover, the SEC’s disclosure rules differ from Taiwan’s, and many people are simply not clear on them. However, platforms like Firstrade, which have a Chinese interface or use translation tools, can help mitigate some of these issues.

Dividend tax is another point to watch. As non-U.S. citizens, the dividends we receive from U.S. stocks are subject to a 30% withholding tax, which significantly impacts dividend investors. But if you buy Taiwanese company ADRs listed in the U.S., the tax rate is based on Taiwan’s 21%, which is more cost-effective.

The last disadvantage is market volatility. Taiwan’s stock market has a 10% daily limit up or down, but the U.S. market does not have such a safeguard. For example, when news of Intel’s layoffs came out, its stock price dropped 26% in one day—such situations are common in the U.S. market. Taiwanese investors used to a more controlled environment need to adapt to this volatility, which demands much higher risk management. Learning to use stop-loss orders and paying close attention before and after earnings reports are essential.

Despite these disadvantages, why is investing in U.S. stocks still worthwhile? Top global companies are listed in the U.S.—TSMC, Toyota, Samsung—all are there. The market liquidity is the highest worldwide, and transparency far exceeds other markets. The S&P 500 has averaged an annual return of 11.5% over the past 20 years, which is truly impressive.

Therefore, although there are drawbacks to investing in U.S. stocks, with proper preparation, choosing reputable platforms, and mastering risk management, it’s not as difficult as it seems. The key is to have sufficient knowledge and mental readiness so you can find opportunities in this most active global market.