The US stock market hosts some of the world’s most sought-after stocks, including Facebook, Google, Apple, and General Motors. Investing in these stocks not only allows you to partake in their growth story but also offers diversification beyond the Indian stock market.
How to Invest in the US Stock Market from India?
Curious about investing in US stocks from India? Wonder no more! You can easily do so through two main methods:
- Direct investment in stocks
- Indirect investment via mutual funds or ETFs
Direct Investments
Ever wondered how to directly invest in foreign stocks from India? Well, wonder no more! You can invest in the US stock market directly by opening an overseas trading account with either a domestic or foreign broker. Keep an eye on the charges before choosing the best app to invest in US stocks.
Opening an Overseas Trading Account with a Domestic Broker
Many domestic brokers have tie-ups with US stockbrokers, acting as intermediaries for your trades. Opening an overseas trading account with such brokers is possible, although certain restrictions may apply depending on the brokerage firm.
Opening an Overseas Trading Account with a Foreign Broker
Alternatively, you can directly open an overseas trading account with a foreign broker that operates in India. Brokerages like Charles Schwab, Ameritrade, and Interactive Brokers are viable options. Be sure to understand the fee structure before diving in.
Indirect Investments
Not keen on direct investments? No problem! You can still gain exposure to US stocks indirectly through mutual funds and ETFs.
Mutual Funds
Several mutual funds invest in US stocks without requiring you to open an overseas trading account or maintain a minimum deposit.
Exchange-Traded Funds (ETFs)
ETFs offer another route to invest in US stocks. You can either purchase US ETFs directly through a broker or opt for Indian ETFs tracking international indices.
Investing via New-Age Apps
With the advent of mobile apps, investing in US stocks from India has become more accessible. However, regulatory restrictions may limit intraday trading in the US market through these apps.
How Much Can I Invest in US Stocks?
Under the Liberalized Remittance Scheme (LRS) by the Reserve Bank of India (RBI), Indian residents can invest up to $250,000 (approximately ₹1.9 crore) per year without special permissions.
What are the Different Charges Involved While Investing in US Stocks?
When buying US stocks from India, it’s essential to consider various charges:
- Tax Collected at Source: A 5% TCS is levied on remittances above ₹7 lakh under the LRS.
- Capital Gains & Dividend Tax: Dividends are taxed at 25% for Indian citizens in the US, but credits can be claimed under the DTAA.
- Bank Charges: Banks typically charge foreign exchange conversion fees and transfer fees.
- Brokerage Fees: Brokerages charge fees on buying and selling shares.
- Foreign Exchange Rate: Fluctuations in the exchange rate can impact costs.
Reasons to Invest in US Stocks from India
Here’s why investing in US stocks might be a good idea:
- Lower Volatility: US stock market indices have historically been less volatile than Indian indices.
- Diversification: Investing in US stocks offers exposure to global mega-corporations, diversifying your portfolio.
- Performance: The US stock market has outperformed the Indian market in dollar terms over the last decade.
- Innovation: With the US being a hub of innovation, investing in promising companies early on is possible.
Things to Remember Before Investing in US Stocks from India
Before diving in, keep these pointers in mind:
- Research: Open an overseas trading account only if you have the time and expertise to analyze the US market.
- Costs: International investing incurs higher charges than domestic investments, so be aware of all associated costs.
- Long-Term Focus: Long-term investing is more cost-efficient than trading, as charges can eat into profits.
- Tax Implications: Consider taxes as per US and Indian laws.
- Start Small: Begin with a small investment and gradually increase as you gain experience.
Summing Up
Investing in US stocks from India opens up new avenues for diversification and potential growth. While international investing has its complexities, careful consideration of risks and costs can lead to rewarding outcomes aligned with your financial goals.
