The US Stock Market has eluded investors all around the world. Indians are no exception to it. An old saying goes like this: “when the mother market falls, the other market will follow suit”. It throws light on the stability and impact of the US market.
If you’re an amateur investor who just started your journey with investment in the Indian market, then you must be wondering how to invest in US stocks from India. Well, the procedure is really simple. You just need the right guide to take you through the processes. Read along to know it all.
But before you invest in the US stock market, you should have the right conviction on why you should invest in the US. Also, you should have a clear idea on your financial goal and investment time horizon.
Why Invest in US Stocks from India
- Investment in market leaders: The US stock market presents a great opportunity to invest in hundreds of top global companies. There is no other market where you’ll see so many market and segment leaders trading side by side.
- Gains from depleting value of Rupee: As the value of Rupee steadily declines, it can fuel up your US-based investment returns. This way, you can benefit from rupee depreciation while using Rupee as your primary currency.
- Diversification: When you’re heavily invested in a single market, there’s always a chance of something going wrong with the country resulting in a red-marked return on investment. Diversifying beyond geopolitical boundaries is one way of averting country risk. And, there’s no better market than the highly-stable US market to begin diversification.
- Investment in rising sectors: Being home to some of the most innovative companies in the world, the US market enables you to join in the growth of rising sectors like EV and AI.
- Huge liquidity: The US offers liquidity like no other market. Even the smallest of small stock has thousands of buyers and sellers. So irregular price fluctuation due to liquidity crunch is not an outcome in the US stock market.
With an excess of $48 trillion in market capitalization, The US stock market is by far the largest stock market in the world. So it totally makes sense to get invested in the world’s largest and most transparent stock market.
How to Invest in US Stocks from India
Technological advancement has opened the gate to global investment. You can now invest anywhere in the world with a few touches on your smartphone’s screen. From S&P 500 to NASDAQ, you can invest your hard-earned money in any stock exchange from the comfort of your home.
There are two distinctive ways to invest in US stocks from India. One is to directly buy US stocks and let the stock price fluctuation fully reflect in your portfolio. The other way is to be a stakeholder in US stocks through indirect investments. Let’s explain both processes in detail.
Direct investment means buying stocks of US companies directly through your trading account. In this category of US market investment, there are two ways you can open a trading account where you can park your US stocks holding.
Domestic brokers, having tie-up with stockbrokers from the States, offer the most cost-effective way of investing in US stocks from India. One prominent name in this space is Stockal, which made investing in international stocks smart, simple, and secure. With Stockal, you can also invest in fractional stocks, leaving behind the missed opportunity of non-investing in stocks like Berkshire Hathaway INC due to high ticket size.
Alternatively, you can also directly open a trading account with US-based stockbrokers. However, the charges of foreign stockbrokers are significantly higher than their Indian counterparts. Also, the opening account procedures are not as easy as that of a domestic brokerage firm.
If you’re not confident enough in your market research skills and want to take professional’s help in finding the right set of US stocks according to your risk appetite, indirect investment is the way to go. There are three predominant indirect investment tools that can aid you in getting exposure to the US stock market. Let’s explore them one by one.
- US-focused Mutual Funds
A few reputed mutual fund houses offer funds with significant exposure to US stocks. Once, these funds were a popular choice to invest in US stocks from India with the help of experienced fund managers.
But now, as more Indians learn the intricate details about stock market investment, many choose to purchase US stocks for better exposure directly. However, suppose you want to take the old route. In that case, Stockal presents you the opportunity to become unitholders of hand-picked US-focused mutual funds that are consistent performers over the years.
ETF or Exchange Traded Funds are low cost mutual funds that are traded on stock exchanges like individual stocks. ETF’s main goal is to diversify your invested amount into tens or even hundreds of stocks.
Nowadays, theme-based ETFs are gaining popularity among Indian investors. Stockal offers all kinds of thematic ETFs that will give you the best opportunity to invest in a certain sector without doing hours of research to find reliable businesses.
- Stock Baskets or Stacks
Stacks are the newest addition in the list of stock market investing tools. Stacks are nothing but baskets of stocks and ETFs, curated by renowned hedge fund managers and asset management firms.
Stockal has a wide range of stacks offering for Indian investors. For example, the US Tech Bluechip Stack has the best of US tech giants like Apple, Google and many more. These businesses have strong MOATs, which will help them stay in the competition for decades to come.
How Much Can Indians Invest in US Stocks?
Now that we’ve cleared out the confusion of whether Indians can invest in US companies or not, let’s discuss the amount that Indians can legally invest in foreign markets. Although there’s no lower limit on US market investment, there’s an upper cap for Indians investing in US stocks.
As per the Reserve Bank of India’s Liberalized Remittance Scheme (LRS), Indians can invest up to $250,000 in a financial year in foreign markets. That means individual Indians can put close to INR 2 crores in US stock exchanges.
For most people, this limit put in place by RBI is enough to satisfy their US market investment needs. However, if you want to invest more, you can create trading accounts on behalf of your family members and invest $250,000 for each family member.
Knowing the variables affecting your return is just as necessary as diversifying your portfolio. Every country, including the US, is likely to face political and economic turmoil. As an investor, you should be fully aware of your investment goals, risk appetite, and potential returns from a certain market.
As you’ve got the answer of how to invest in US stocks from India, let’s end this blog on a high note. Although India is enjoying a high tide of economic prosperity in recent times, it always makes sense to ride the growth of other nations. And, if you want to harness the growth of the US next-gen firms, Stockal is your best bet.