Apart from diversification in different sectors and industries, some investors are keen to diversify beyond geographical borders too. Today investors invest a part of their portfolio towards global markets to minimize the risk by the way of diversification in portfolios.
One of the most favored markets for investment is that of the US. Investing in the US stock market attracts attention because the US is home to companies having a global reach and popularity like Facebook, Alphabet, Netflix, Tesla, etc. Also, it generates value in dollars for the future.
In this article, we have discussed details on How to invest in US stocks from India. It’s much easier than anyone would initially imagine and definitely worth a try!
Reasons to invest in US stocks from India
Here are some reasons why to invest in US stocks:
- Most of the popular global MNCs are headquartered in the USA.
- US-listed companies account for the world’s 35% to 40% market capitalization.
- In the past years, major US stock indices like NASDAQ, S&P 500 and Dow Jones have been less volatile than Indian stock indices.
- Historically, US stock markets have performed better than Indian stock markets.
Different ways to invest in US stocks from India
There are two ways to invest in US stocks from India:
1. Direct
- You can directly make an investment by opening your trading account with a domestic broker who has tie-ups with a foreign broker.
- Or you can open your trading account with a foreign broker having a presence in India.
Some brokers even allow to buy and sell a fractional value of a stock. Also, before choosing a broker, ensure you are aware of all the costs and charges.
For reference, you can check HDFC Securities, Motilal Oswal.
2. Indirect
- Mutual funds- Investment through mutual funds is a convenient way to invest your money in international exchanges without much hassle to choose the stocks. However, the expense ratio i.e. fees charged to manage the funds in the case of mutual funds tends to be high.
For reference, you can check Groww, 5paisa.
- Exchange-Traded Funds (ETFs)- Exchange-traded fund is a security that tracks an index, sector, etc. It is listed on the stock exchange as a regular stock. You can invest in US ETFs through a domestic or international broker. Also, you have the option of investing in an Indian ETF of US indices.
For reference, you can check Stockal.
- Investment through apps: There are multiple easy-to-use apps that let Indian investors invest in US stocks. They are as easy-to-use as any other social media app.
For reference, you can check Winvesta.
Few things to keep in mind before investing in US stocks from India:
- Ensure to have detailed research on major investment sectors of the US economy to make an informed investment decision.
- According to the guidelines of RBI, an individual is permitted to invest up to $ 250,000 (₹ 1.9 crores) per year in overseas markets.
- Have a detailed comparison among available options of brokerage firms in terms of costs and charges.
- Consider all the applicable taxation systems of both – India as well as the USA.
