If you’re among the 11 crore Indians investing in the Indian stock market, you’ve taken the first step towards long-term wealth creation. But like all good wealth management handbooks, diversification must be factored in. For instance, investing in another market allows you to grow some of your wealth, even if one market isn’t doing particularly well temporarily.
With companies like Amazon, Apple, and Meta (Facebook), the US stock market presents a one-of-a-kind investment opportunity. This means the total pool of invested money in these stocks is trillions of dollars, making them relatively safer.
In this blog, we explore how one can invest in the US stock market from India and buy US Stocks from India.
To start investing in the US stock market from India, you can open an overseas trading account with a domestic brokerage firm that has tie-ups with US brokers.
In this method, your domestic broker will act as an intermediary, facilitating and executing your trades. However, depending on the broker, you might have to weather trade caps and restrictions on investment vehicles.
This route allows you to tap into the US stock market without intermediaries.
You can opt for foreign brokers like Ameritrade, Charles Schwab, and others with an Indian presence to start directly investing in the US stock market.
You can also trade US stocks through the NSE IFSC, a wholly-owned subsidiary of the National Stock Exchange (NSE). You will need a new demat account with an IFSCA-licensed broker to start investing.
It’s important to know that investors can only invest in 25 US stock options, including Amazon, Apple, Microsoft, Walmart and others. However, the total number is set to go up to 50 in the near future.
You can invest in US Stocks via Mutual Funds. This lets you forego the costs of an overseas trading account. This investment route allows you to diversify your investment across various asset classes and industries.
However, currently, the MF route remains partially restricted. As per RBI directives, investment through this route is paused as international mutual fund investments have already met the 7 billion industry cap.
There are two ways of investing through ETFs or Exchange Traded Funds. The first entails purchasing US ETFs via a domestic or foreign broker. The second is the indirect route, where you can purchase Indian ETFs of US indices.
The lower expense ratio of ETFs makes them more favourable options than actively managed funds.
Investing on the Fi app allows you to invest directly into US stocks. Fi Money partners with SEC-regulated American brokerage firms who buy and hold stocks on your behalf. Some advantages of investing in US stocks through Fi Money include:
If you’re an existing Fi user, you should be able to start investing right away. If not, opening an account on Fi should take you all of 5 minutes, after which you should be ready to go!
Read up about US stock market timings and how they affect India here.
Here are the top 5 reasons why you should buy US stocks from India:
Diversifying your portfolio helps weather market-linked fluctuations. By investing in US stocks from India, you broaden your investment exposure. This allows you to mitigate economic risks associated with the crests and troughs in the Indian market.
Investing in the US stock market from India gives you access to several blue-chip companies like Amazon, Apple, Tesla and others. The sheer size, trade volume and investment options in the US stock market present a unique investment opportunity.
As the nerve centre of innovation, the United States is home to thousands of promising enterprises. With segments like robotics, AI, ML and biomedicine flourishing, investing in US stocks helps you grow your wealth on the back of all the ground-breaking progress being made. You can tap into this growth potential of budding innovative ventures and reap the benefits of an early bird entry.
Currency exchange rates add to the gains you derive from investing in the US stock market. The US dollar was at ₹63 in January 2018 and stood at ₹83 as of January 2023. That’s a 30% appreciation in 5 years. Investing in US stocks also lets you gain from the sheer value of dollar growth.
While all markets go through ups and downs, the Indian stock market has recorded bigger swings than the US. Besides the Russo-Ukrainian conflict of 2022, which shook most global markets, the relative stability and manageable cyclical changes in the US market make it a less volatile option for investors. This, coupled with the consistent appreciation of the Dollar, has ensured stable returns for investors.
If you’re thinking about starting your investment journey in the US stock market from India, here’s a list of things you should keep in mind:
Your profits from investments in the US stock market are covered under the DTAA or Double Tax Avoidance Agreement. As per the agreement, the same income cannot be taxed twice. Dividend income from US stock investments is taxed at 25% for Indians and can be claimed as a Foreign Tax Credit on domestic tax fillings (due to DTAA).
While capital gains are immune from taxation in the US, in India, there’s a 20% long-term capital gains tax levied for holdings of two years or more. Capital gains for a short-term holding (less than two years) are added to your annual income and taxed as per your income slab.
Investments in the US stock market are regulated as per RBI’s Liberalised Remittance Scheme or LRS. The LRS mandates a yearly investment cap of $250,000 per investor. Your investments have to remain within this stated investment cap.
Apart from taxes levied on your returns, there are other charges you’ll have to shoulder when investing in US stocks from India. From brokerage fees, FX conversion charges and transaction fees to annual maintenance fees, there are quite a few overheads to consider.
Unless you’re investing in US stocks through Fi Money, you need to pay no extra brokerage or commissions.
Your investment strategy should be centred around your investment goals. In other words, your approach should ideally reflect your life goals - whether you wish to relocate, fund your child’s education or simply build a corpus for your retirement. Once you’ve figured out your investment goals, you can pick an investment avenue - direct or indirect- that best suits this purpose.
Like most things that have gone remote after the pandemic, US stock investing can be done from India from the comfort of your home. It’s a lot like investing in Indian stocks except, you can also buy fractional shares. The top stocks in the US market have a market capitalisation that runs into trillions of dollars, making them substantially safer to invest in too! This lets you grow your wealth on the back of all the advancements in the global market.
Fi Money helps you to invest in top US companies — at industry-best forex rates. So you can own shares in Apple, Tesla, Microsoft, and so on! With an intuitive user interface, Fi simplifies the world of US Stocks. Besides in-app explainers, novice investors can use Curated Collections (like All-Time Favourites) to make decisions. Seasoned investors can dive deeper, apply many filters (like Stock Price) & pick from a wide range of international options. What's more, on Fi, you can buy US Stocks instantly with zero brokerage fees.
Still curious? Learn more about how to get started with investing in US Stocks through this short video: https://www.youtube.com/shorts/VywxVwa-9nM
Yes. You can invest in NASDAQ from India via direct or indirect investment routes. As per the direct routes, you can open an overseas trading account with a domestic or international brokerage firm. Alternatively, you can start investing via the indirect path through mutual funds and ETFs.
As such, stocks are not favourable short-term investment vehicles. Stocks perform better in the long run, offering higher returns than most other investment tools. Thus, when it comes to US stocks, investing in them for the long run would be a better option.
There are plenty of ways. Apps like Fi Money are great places to begin. While they’re both fully digital, Fi Money allows you to invest at no additional cost, in real-time and even lets you start with amounts as low as ₹100.
It is estimated that only 3% of Indian households are actively investing in the stock market in India.
Fi Money helps you to invest in top US companies — at industry-best forex rates.
