Have you ever thought of how to invest in US stocks from India? ever wanted to invest in Apple, Amazon, Facebook, Google, Tesla or Microsoft? I certainly did.
That’s why today we are going to discuss how to invest in US stocks from India and the best way to invest in the US stock market from India.
Without wasting any time let’s dive into It.
Why Should You Invest in US Stocks?
Owning investments in international stocks can help in diversifying your portfolio.
If you have some surplus money to invest and are willing to take extra risk, investing in foreign stocks will widen your options.
Advantages of Investing in US Stock Market
Investing in us stocks helps in diversification. If the Indian stock market goes down due to some local problems, US stocks can decrease the risk of loss in your portfolio.
2. Get Access to the World’s Largest Financial Market.
3. Profit from Dollar’s Appreciation against the Rupee
4. You Can Invest in Top Technology and Innovative Companies in the World like Tesla, Apple, Google, Microsoft, Facebook, Amazon, Netflix Etc.
Learn More about Investments: 8 Best Personal Finance Books
Disadvantages of Investing in US Stock Market
There are two sides to every coin.
Here are a few important things to know before you invest in US stocks:
1. High Charges
US’s stock brokerages can be higher compared to the Indian Stock Market.
2. Currency Exchange Rate
As we have to invest in terms of dollars we have to consider currency exchange rates.
3. Limit on Investment
There is a limit in investing in foreign stock markets set by the reserve bank of India(RBI). You can only invest up to $2,50,000 in a year.
How to Invest in US Stocks From India?
1. Mutual Funds and Exchange Traded Funds
The easiest and most effective way to invest in the US stock market is by investing in mutual funds and etfs.
The best thing about investing in the US stock market through mutual funds and ETFs is that you don’t need to open any us stock brokerage account.
There are a number of mutual funds and ETFs that invest in the US stock market.
You can invest in those mutual funds/ETFs to indirectly invest in US stocks.
The disadvantage of mutual funds and ETFs is that you have to invest in a basket of stocks, you cant choose an individual stock to invest in.
Mutual fund is one of the best ways to invest in us stocks from India
Here are some mutual funds you can look into:
- Nippon India US Equity Opportunities Fund
- Aditya Birla Sun Life International Equity Fund
- SBI Magnum Global Fund
- ICICI Prudential US Bluechip
- Parag Parikh Long Term Equity Fund
- DSP US Flexible Equity Fund
- Edelweiss US Technology Equity Fund
- Kotak US Equity Fund.
Some ETFs you can look into:
- Motilal Oswal Nasdaq 100 ETF
Note: These are not the recommendation. Do your own research before investing.
2. International Brokerage Platforms
In recent times, many startups are coming up to help Indians to invest in foreign stocks.
The application process to open an account is easy and paperless with most of these platforms.
All of these platforms have tie-ups with us based SEC-registered broker DriveWealth.
All of these platform offers mostly same services like:
- Create an Account in Minutes
- Fractional Share Investing
- No Minimum Balance
- No Account Opening Charges
- No Commission
These are the platform that lets you invest in US stock markets:
Vested finance is the first commission-free US stock investing platform for indians.
Vested is a US securities and exchange commission registered investment adviser.
Their online platform enables investors from India to invest in US stocks and ETFs easily.
With no account opening charges, you can do unlimited trades that charge no commission and give you access to as many as 3400+ us stocks and ETFs. Additionally, there is no minimum balance requirement and you can also buy into fractional shares
HDFC Is one of the biggest names in the Indian banking sector.
HDFC Security Is HDFC Bank’s Subsidiary Company.
HDFC Security Global Investing Is powered by Stockal.
IND SuperMoneyapp is a plateform that automatically organises your money and recommends actions to increase savings and earnings across investments, loans, expenses and taxes.
Their private wealth management offering, INDwealth delivers premium services such as private family office, analysts, TAX services, succession planning and trust services.
Stockal is a NewYork based company that offers Indians the facility to invest in global markets like the US stock market.
In near future, they will also allow you to open an overseas saving and expense account for yourself and your family.
Note: These apps offer commission-free trading but remember that you have to pay currency exchange fees and charges every time you deposit and withdraw money. So if you are serious about investing using these apps, then try to deposit and withdraw in bulk rather then doing it in small quantities.
What Are The Popular US Market Indices?
Just like we have the Sensex and Nifty indices and NSE & BSE in India, the US market has its own indices & stock markets.
The main Indices are:
DJIA: The DOW Jones Industrial Average
S&P 500: There Is Also the Standard & Poor’s 500
The companies that make up the S&P 500 and DJIA are then traded on NASDAQ & NYSE which are stock exchanges of the US.
NYSC: New York Stock Exchange Is the Largest Stock Exchange in the World.
NASDAQ: National Association of Securities Dealers Automated Quotations Is the 2nd Largest Stock Exchange in the World.
How Much Money Can You Invest in US Stocks from India?
Under the liberalised remittance scheme (LRS), the Reserve Bank of india (RBI) allows an indian resident to invest up to usd $250,000 per year in overseas stock markets.
Where Would You Have to Pay Taxes?
Taxes on Investment Gains:
Capital gains made through foreign stocks and funds are taxed in the same manner as debt mutual funds in India. Gains within a three-year holding period are treated as short-term and are taxed at your slab rate. Gains after a three-year holding period are treated as long-term and are taxed at 20%, with the benefit of indexation.
Taxes on Dividends:
Dividends are taxed at your slab rate. But if tax is deducted at the source, you can claim benefit under the double taxation avoidance agreement (Dtaas) between India and the deductor country.
Each brokerage account in the US is usually insured up to $500,000 by the securities investor protection corporation.
You can check if the broker is part of this insurance program by looking into your broker’s website.
If your portfolio is small, the best way to invest in the US stock market is via a mutual fund registered in India.
I advise you to don’t invest more than 10% of your portfolio in the US market.
Opinion: Most of the international markets are a little saturated. Therefore, growth-wise, India has better potential.
Let me know what you think about investing in US stock markets and are you going to invest in the US stock market?
Is Investing in US Stocks from India Legal?
Yes, It Is Completely Legal. Under the Liberalised Remittance Scheme (LRS), the Reserve Bank of India (RBI) Allows an Indian Resident to Invest up to USD $250,000 per Year in Overseas Stock Markets.
Who Can Invest in US Stocks from India?
Anyone in India, with Proper ID Proof (Aadhaar/Passport, Etc) and a Pan Card Can Invest in the US Stock Market.
Can NRIs Invest in US Stocks?
Yes. Any Non-us Resident NRIs Can Invest in US Stocks If You Have Proper Kyc Documents like ID Proof and Tax Documents from the Country of Your Residence.
Can I Invest in NASDAQ from India?
Yes, You Can Invest in NASDAQ from India. However, You Can Do So Only through a Brokerage Firm and Using a Trading Account.
Which are the major stock exchanges in the US?
The NYSE: New York Stock Exchange and the NASDAQ – National Association of Securities Dealers Automated Quotations Are the Two Major Us Stock Exchanges.
Why Are Risks Higher for Investing in US Stocks?
The Risks Are Higher When Investing in US Stocks Because You Are Investing in a Market You Can’t Always Keep Track Of. The Lower Liquidity and the Fact that Your Losses Will Also Be in USD Further Adds to That.
Should I Invest in US Stocks for the Short-Term?
Whether You Should Invest in US Stocks for Short Term Depends on a Lot of Factors like Your Goal, Risk Appetite and Investment Amount. I Don’t Recommend It. You Should Only Invest for Long Term. Please Consult your Wealth Advisor Before Making ANY Investments.
What Are the Documents Required to Transfer Money to Invest out of India?
The Following Documents Are Needed:
1. Form A2 along with a Declaration Form: As per Fema, Required Every Time the Money Is Sent Abroad to Declare the Sum Amount That Is to Be Transferred. Your Bank Will File This for You within the Lrs Filings. Stockal Automatically Fills This for You – All You Need to Do Is, Make Sure that the Information Is Correct, Then Download the Filled-In Form, Sign and Upload It Back for Your Bank to File.
2. Bank KYC Documents: Pan Card and Your Address Proof.
What Insurance or Protection Do I Get for My Account?
Each Brokerage Accounts in the US Is Usually Insured up to $500,000 by the Securities Investor Protection Corporation.
How Much Money Can You Invest in US Stocks from India?
Under the Liberalised Remittance Scheme (LRS), the Reserve Bank of India (RBI) Allows an Indian Resident to Invest up to USD $250,000 per Year in Overseas Stock Markets.
Is There Any Tax Deduction for My Withdrawals or Gains in the US Markets?
There Is No TDS (Tax Deduction at Source) for Your Stock Market Gains in the US. So When You Make Money and Send It Back to Your Indian Bank Account, the Broker in the US Does Not Deduct Any Tax on It. You Will Have to Pay Short-Term Capital Gains Tax or Long-Term Capital Gains Tax in India, Whatever Is Applicable. Short-Term Capital Gains Apply If a Security Is Held for Less than 12 Months.
Is It Possible to Invest in US Stocks from India
Yes It is Possible.