Companies like Apple, Google, and Netflix have become part of our daily lives, from the phones in our pockets to the streaming services we binge-watch. But did you know that you can own a piece of these global companies? Yes, you can now invest in US stocks from the comfort of your couch in India.
But why consider US stocks? It’s simple: diversification and higher returns.. You’re not putting all your eggs in one basket by spreading your investments across different economies. Plus, with a whopping $50.8 trillion market capitalisation as of early 2024, the US stock market dwarfs India’s $4.6 trillion – offering a vast playground for your investment goals.
Intrigued? Let’s understand how you can invest in US stocks from India.
Why Should You Invest in US Stocks?
Before we get into the ‘how,’ here are some reasons ‘why’ you should invest in US stocks:
Diversification
Diversifying your portfolio helps you weather market volatility. Investing in US stocks from India increases your investment opportunities and reduces the economic risks associated with the Indian market’s peaks and troughs.
Exposure
With industries such as robotics, AI, machine learning, and biomedicine thriving, investing in US equities allows you to grow your wealth while benefiting from groundbreaking advances and capitalising on the growth potential of innovative businesses.
Better Returns
Currency exchange rates increase your gains from investing in the US stock market. In January 2018, the US dollar was at ₹63, and by January 2023, it had reached ₹83. That’s a 30% increase in five years. Investing in US companies also benefits you from the inherent value of dollar growth.
Lower Risks
By diversifying your investments across stocks from various companies worldwide, you’ll reduce your overall risk while enjoying the potential returns from different markets..
Invest in Fraction Shares
In contrast to the Indian stock market, where you must acquire at least one share to invest in a stock, the US market lets you purchase a portion of a stock through fractional share investing.
Different Ways to Invest in US Stocks from India
There are two alternatives for direct investment methods:
Direct Investments
Overseas Trading Account with a Domestic Broker
Many Indian brokers partner with US stockbrokers as mediators for your trades. You can create an international trading account with any of these firms. However, depending on the brokerage firm, you may be restricted in the type of investments or the number of trades you can execute.
Overseas Trading Account with an International Broker
You can also open an international trading account directly with a foreign broker based in India. Examples of such brokerages are Charles Schwab, Ameritrade, and Interactive Brokers. Before opening an account, be sure you understand all of the fees. So, thoroughly do your homework before deciding on the best broker to buy in US equities.
Investing Apps
Several companies, such as Appreciate, have launched apps to help Indians invest in the US stock markets. Here are some benefits of using the Appreciate Apps:
● Easy Access to US Markets: Appreciate, lets you buy US stocks and ETFs with just ₹1. This allows small investors to build their international portfolios gradually.
● Real-Time Trading: Appreciate offers live access to US markets despite the time difference. This means you can trade in US markets whenever you want right from your phone.
● Advanced Features: Appreciate allows fractional investing, meaning you can own a piece of any US stocks for as little as ₹1. It also offers pro-level tools like detailed analytics and market insights.
● Hassle-Free Currency Exchange: The app smoothly handles INR to USD conversions, often beating traditional bank rates. This saves you the trouble of managing separate currency accounts.
● Learning Resources: The app includes educational tools to help newcomers understand US stock markets, such as video guides and articles on investing strategies.
How to Invest Using Appreciate?
Here’s a step-by-step guide on how you can invest in US stocks using the Appreciate app:
- Create an Account: Sign up on Appreciate, provide personal details, and complete KYC verification with your PAN card and proof of address.
- Fund Your Account: Link your bank account and transfer money to Appreciate. They offer competitive forex rates for INR to USD conversion.
- Choose Your Stocks: The app allows browsing and researching US stocks. You can also use Appreciate’s tools to analyse company performance and market trends.
- Place Your Order: Execute your buy order during US market hours. Choose between market prices or set a limit order for your preferred price.
Indirect Investments
Apart from these direct investments, you can also invest in US stocks indirectly through:
Mutual Funds
If you don’t want to open a separate foreign brokerage account to invest in US stocks, you could use mutual funds instead. Many Indian fund providers offers mutual funds specifically tailored to invest in the US markets.
ETFs
Unlike mutual funds, exchange-exchanged Fund (ETF) units are exchanged on the stock exchange throughout the trading day. So you can purchase and sell ETF units, just like you would buy and sell stocks.
You can trade ETFs using a Demat account with any brokerage company. Many ETFs provide access to the NASDAQ and other major foreign indices. To buy US ETFs, use a domestic or international broker and an Indian ETF that tracks a global index.
What are the Charges When Investing in US Stocks?
Investing in US stocks from India can be a good way to diversify your portfolio, but it’s important to understand the various charges involved. Here’s a breakdown of the key costs you should be aware of:
● Tax Collected at Source (TCS): The Indian government levies a 20% TCS on remittances above Rs 7 lakh under the Liberalised Remittance Scheme. This tax applies only to the amount exceeding Rs 7 lakh. The good news? You can claim this as a refund when filing your Income Tax Return.
● Capital Gains and Dividend Tax: While the US doesn’t impose capital gains tax on your investments, you must pay it in India. As for dividends, the US taxes them at 25% for Indian citizens. Thanks to the Double Tax Avoidance Agreement, you can claim credit for taxes paid abroad to avoid double taxation.
● Bank Charges: Your bank will likely charge fees for currency conversion and international transfers. Some banks also have a one-time account setup fee. These charges can add up, so compare different banks to find the best rates.
● Brokerage Fees: Stockbrokers charge fees for buying and selling shares. These fees vary between brokers, so shop for competitive rates that suit your trading style and frequency.
● Foreign Exchange Rate Fluctuations: The exchange rate between Indian Rupees and US Dollars can significantly impact your investment costs and returns. A favourable rate can boost your profits when buying or selling, while an unfavourable one can eat into your gains.
Conclusion
Allowing oneself to explore commencing US stock trading from India and investing in international marketplaces might help diversify your portfolio. With a load of information, researching and analysing stocks is easier than ever.
Also, choose a reliable platform such as Appreciate to make your investments. With seamless INR to USD conversion at competitive rates, Appreciate simplifies global investing. Also, it allows Indian investors to buy fractional shares of popular US companies with as little as ₹1, making international investing accessible to everyone.
FAQs
Can I invest in US stocks from India?
Yes, Indians can legally invest in US stocks by following the guidelines set by the Reserve Bank of India (RBI. This lets you diversify your investment portfolio across international markets.
Which app is best for investing in US stocks from India?
Apps like Appreciate make investing in US stocks accessible, providing a seamless experience even for beginners. These platforms often include educational resources and user-friendly interfaces to help you make informed decisions.
Which is better, US stocks or Indian stocks?
US and Indian stocks offer unique benefits, but the US stock market has historically shown slightly higher returns with less volatility. Your choice should depend on financial goals, risk tolerance, and market familiarity.
How much can I invest in US stocks?
Under the Liberalised Remittance Scheme, you can invest up to $250,000 (approximately ₹1.9 crore) per financial year in US stocks. This allows for significant international investment without needing any special permissions.
What documents are required to invest in US stock from India?
To invest in US stocks from India, you’ll need a PAN card, proof of address, and a bank statement or income proof. These documents ensure compliance with regulatory requirements and help set up your investment account.
Company Details:
Appreciate
Address: Floor-2, 0-14, Mahalaxmi Industrial Estate, Dainik Shivneri Marg, Worli, Mumbai City, Maharashtra, 400018
E: [email protected]
M: +91 70393 25849 (9 am to 9 pm)
