The global appeal of the US stock market, renowned for its innovative companies and potential for significant returns, attracts many Indian investors. However, many need help figuring out how to invest in US stocks from India. This article helps you understand the process by outlining options and considerations for your investment journey. It will also answer all the questions related to how to invest in US stocks from India.
How to Invest & Buy in US Stocks Markets from India
Two primary paths pave the way if you are looking for how to invest in US stocks from India:
1. Direct Investment:
- Open a US Trading Account: To invest in US stocks from India, partner with a domestic broker offering international platforms. ICICI Direct, Kotak Securities, and HDFC Securities are some brokerage firms that facilitate seamless access to US trading accounts, enabling investors to trade US stocks directly from India. By collaborating with such brokers, investors can access a wide range of US stocks and efficiently manage their investment portfolios across international markets.
- Fund Your Account: Transfering funds to your US trading account through authorized channels like the Liberalized Remittance Scheme (LRS) is the next step if you are looking for answers to how to invest in US stocks from India. The Liberalized Remittance Scheme (LRS) is a policy by the Reserve Bank of India (RBI) that enables Indian residents to send money abroad, simplifying the process compared to earlier restrictions.
- Trade US Stocks: Investing in US stocks enables buying and selling individual stocks or investing directly in US-listed ETFs (Exchange Traded Funds) such as:
- SPDR S&P 500 ETF (SPY): Tracks the S&P 500 index, providing exposure to 500 large-cap US companies.
- Vanguard Total Stock Market ETF (VTI): Tracks the US Total Market Index, offering exposure to the entire US stock market, including large, mid, and small-cap companies.
- Invesco QQQ Trust (QQQ): Tracks the Nasdaq-100 Index, providing exposure to 100 of the largest non-financial companies listed on the Nasdaq stock exchange.
- iShares Core MSCI Emerging Markets ETF (IEMG): Tracks the MSCI Emerging Markets Index, offering exposure to a basket of stocks in developing countries worldwide.
- iShares Global Aggregate Bond ETF (AGG): Tracks the Bloomberg Barclays Global Aggregate Bond Index, providing exposure to investment-grade bonds issued by governments and companies worldwide.
Investors can execute trades on US exchanges, diversify portfolios with individual stocks, or opt for ETFs for broader exposure to various sectors of the US market while searching for options on how to invest in the US stock market.
2. Indirect Investment:
- Mutual Funds: If you are researching how to invest in US stocks from India, you can opt for India-based mutual funds that offer exposure to US stocks. These funds provide diversification and expert management, reducing risks associated with direct stock investments. ICICI Prudential US Bluechip Equity Fund, Franklin US Opportunities Fund, SBI US Dynamic Equity Fund, and HDFC US Bluechip Fund are some India-based MFs offering US stock exposure. To know more about how to invest in US stocks from India, you can research and select mutual funds that invest a large portion of their assets in US stocks.
- Exchange Traded Funds: To get more options on how to invest in US stocks from India, you can also choose India-listed ETFs tracking US stock market indices like Nifty US Equity ETF, ICICI Prudential MSCI ACWI IMI ETF, Nippon India Nifty Next 50 ETF offering passive exposure. To invest, investors can open brokerage accounts with firms providing access to Indian stock exchanges, where these ETFs are listed, and purchase shares through the trading platform.
- ADRs/GDRs: Invest in American Depositary Receipts (ADRs) or Global Depositary Receipts (GDRs) representing US stocks traded on Indian exchanges. These financial instruments allow investors to access US stocks from India’s domestic market. Individuals seeking answers to how to invest in US stocks from India can open brokerage accounts with firms such as ICICI Direct, HDFC Securities, or Kotak Securities, offering access to Indian exchanges, enabling them to trade ADRs or GDRs seamlessly.
Direct Investment grants greater control and potentially higher returns but involves higher fees and complexities. Indirect investment is simpler and cheaper but offers less control and lower returns.
Charges and Taxes on Investing in US Stocks
Investing in US stocks from India entails certain charges and taxes:
- Brokerage Fees: Fees your chosen broker charges for trades and account maintenance.
- Transaction Charges: Platform fees associated with each transaction.
- Conversion Fees: Charges for converting rupees to US dollars and vice versa.
- US Withholding Tax: 10% tax on dividends received from US stocks unless reduced by a tax treaty.
- Indian Capital Gains Tax: Applicable on profits earned from selling US stocks.
How Much Can You Invest?
The Reserve Bank of India’s LRS scheme allows Indian residents to invest up to USD 250,000 per financial year in US stocks, which includes capital and current account transactions, including education, medical expenses, investments, and property purchases abroad.
With this increased limit, investors who know how to Invest in US stocks from India can diversify their portfolio and get access to high-growth potential companies. But before investing in the US market, you need to understand your financial goals and preferred method (direct or indirect) before taking the plunge.
Additional Considerations:
- Market Fluctuations: When embarking on your journey on how to invest in US stocks from India, preparing for market volatility is crucial. The US market, like any other, experiences periods of both growth and decline. It’s essential to develop a strong understanding of market cycles and establish a risk tolerance that aligns with your investment goals in the US market.
- Currency Fluctuations: As an Indian investor, navigating currency exchange rates affects your returns when investing in US stocks from India. The value of your US dollar holdings can fluctuate based on the rupee-dollar exchange rate. Staying informed about economic trends can help you make better decisions and handle the complexities of investing in US stocks from India.
- Long-Term Perspective: Consider adopting a long-term investment strategy to lower the risk and truly leverage the power of compounding returns. Focus on holding stocks for extended periods. A long-term approach aligns better with the inherent volatility of the stock market and allows you to reap the benefits of compounding over a longer horizon. If you want to know how to invest in US stocks from India, remember that patience and a long-term perspective are crucial for success in this market.
FAQ
Can I invest in US stocks from India?
Yes, you can invest in US stocks from India. You must open an account with an Indian brokerage firm that offers access to international markets. These firms facilitate investments in US stocks through various means such as American Depositary Receipts (ADRs), Global Depositary Receipts (GDRs), India-listed ETFs tracking US indices, or directly trading on US exchanges. Now that you have understood how to invest in US stocks from India, you need to consult your financial advisor to discuss your financial goals.Which app is best to invest in US stocks from India?
Several apps cater to investing in US stocks from India, offering features like fractional shares, low fees, and user-friendly interfaces. HDFC Bank's Global Investing platform, ICICI Bank's Global Investment platform, and Axis Bank's Global Remit Banks also offer convenient platforms to help invest in US stocks from India. These platforms facilitate seamless investment in US stocks, providing access to various options and investment tools. They have all the relevant answers to questions on investing in US stocks from India and can help you through the fees, features, and user experience. You can choose the best app based on individual preferences and needs.
Can I buy foreign stocks in India?
Yes, you can buy foreign stocks in India. Through various investment platforms and channels like mutual funds, exchange-traded funds (ETFs), and brokerage firms, Indian investors can access and invest in stocks listed on international exchanges, including those in the US and other countries. You get multiple options if you search for how to invest in US stocks from India. But it is also important to note that it comes with greater responsibility and risk.
*Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as recommendation or investment advice by Research & Ranking. We will not be liable for any losses that may occur. Investment in securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL, and certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.
I’m Archana R. Chettiar, an experienced content creator with
an affinity for writing on personal finance and other financial content. I
love to write on equity investing, retirement, managing money, and more.