Buying Samsung Stock: What You Need To Know

Estimated read time: 4 minutes

You can't go shopping for household appliances without seeing Samsung as one of the leading brands in every showroom you shop at. It has brand recognition, longevity in the business world, and makes a wide variety of products, but does that mean it's a sound investment?

SSNLF: An Investor Profile

If you are a venture capitalist when it comes to picking your investments, you might want to consider Samsung stock.

Venture capitalists are investors who offer capital to startups or small companies that are looking to expand. These investors are willing to shoulder the risk for a piece of the action and the hopes of solid economic growth.

Samsung is constantly on the lookout for such companies — they want to spot new start-ups and new technology that can take them to the next level. In 2017, Samsung made headlines for the announcement of its Samsung NEXT Fund. It's a $150 million venture fund that is looking for companies who are breaking ground in disciplines such as artificial intelligence and virtual reality.

Pros and Cons of SSNLF Stock Today

With Samsung coming off a less-than-stellar 2018, you may be conflicted about whether to purchase Samsung stock right now or pursue other investments like cryptocurrency or the oil and gas sector. Let's examine the upsides and downsides to doing so because this stock is priced high, so the investment can be a big one.

Pros
Samsung doesn't put all its eggs in one basket — it has a lot of variety in its units, which include Harman, Device Solutions, IT & Mobile Communications, and Consumer Electronics.
It does push the envelope with some of its products, including the release of a foldable smartphone, the Samsung Galaxy Fold, which is set for April 2019.
If you're looking for an income stream, one way to do that is by investing in dividend stocks. Samsung does pay dividends, which may make it a good pick if you're interested in creating a revenue stream or reinvesting those dividends.
Cons
Samsung Electronics didn't do as well as hoped in its smartphone and memory chip businesses. Memory chips generally make up about one-third of the company's total revenue. Whether that decline in sales is a blip on the radar or a longer-term trend remains to be seen.
It appears the current demand for smartphones is on the decline, which could signal future trouble for at least part of Samsung's business. Also troubling is the fact that foreign companies, particularly in China, are coming out with smartphones that sell for a lower cost.

Before You Invest

If you're going to invest in Samsung stock, the first thing you have to do is open a brokerage account. But even then, you're going to need to take a creative approach because Samsung, a South Korean company, isn't available on a major U.S. exchange. We'll cover that in more depth in the next section, but it's something you'll need to consider before you invest.

You'll also have to look at your budget and decide how many stocks you can afford. Here's a hint: you're going to need deep pockets if you plan to buy many direct shares of Samsung stock. As of late February 2019, a single share of Samsung stock was going for more than $2,200.

If you're looking at Samsung because you want to establish a dividend income as another revenue stream, there are cheaper companies you can invest in, but, as a long term investor, you might decide that now is the time to strike on buying Samsung stock since it's cheaper right now than it has been at times in the past.

If you already have Samsung stock, it might be wise to keep holding it to see how the foldable smartphone release pans out.

How To Buy Samsung Stock

Because Samsung stock isn't available on a major U.S. exchange, you'll have to go about purchasing it in other ways, and some of those ways are going to be a bit of a headache for you.

One option, although it would be undesirable for many run-of-the-mill investors, is to open a South Korean brokerage account. That's no small feat. You'll need to jump through hoops there to obtain an Investors Registration Certificate.

There are easier ways if you can give up the idea of owning direct Samsung stock. You can opt for buying shares in an exchange-traded fund instead, more commonly known as an ETF.

An ETF can actually give you less volatility than owning a single stock because ETFs involve one investment that is spread through a variety of stocks that have a common denominator, such as the sector or country they come from. If you've ever invested in mutual funds, the concept is similar.

If you find an ETF from South Korea, such as Franklin FTSE South Korea ETF, you can own a chunk of Samsung through that holding. While it won't be the same as holding straight-up Samsung stock, you won't have the headaches you would in trying to buy in an overseas market.

Plus, you may not feel the need to watch the market as obsessively, and you may be less stressed over any fluctuations because you won't have all of that investment solely tied up with one company. No matter how you choose to spend your money, you have to be able to sleep well at night without worrying.

Do What's Right For You

When it comes to deciding whether to buy Samsung stock, do what is best for you — whether that's going through the hoops so you can own a direct piece of stock or going for an ETF that will give you Samsung exposure with less overall risk.

Who knows? Maybe the right decision for you will be to skip Samsung stock entirely in favor of finding something more readily accessible for you to buy.