The US stock market is the place where the stocks of companies registered in the US are listed and publicly traded. Like most stock markets worldwide, the US stock market today is also entirely digitized. It’s now possible to buy and sell stocks from websites and mobile apps. What’s better is that it’s also possible to buy US stocks from India. You can do this by opening an overseas trading account with a domestic or foreign stock broker.
However, before you start investing in the US stock market, it is essential to understand how it works.
Trading in the US stock market primarily happens on the following two stock exchanges:
The NYSE is the oldest American stock exchange and the largest equity stock exchange in the world. The Nasdaq, on the other hand, is a younger stock exchange where most of the global technology leaders like Apple and Google are listed.
Overall, there are as many as 5,000 or more US stock market indices today. The most popular among these are the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average. Here is a brief overview of how these indices are constituted.
The Standard & Poor's 500 Index (or the S&P 500) is composed of the top 500 companies in the US markets, sorted primarily by their market capitalization.
This market index tracks the performance of the 3,000-odd stocks that are listed and traded on the Nasdaq exchange. Some of these stocks belong to companies that are not listed in the US too.
Abbreviated to the DJIA, this is a price-weighted index that is composed of the most prominent 30 companies in the US stock markets.
You can construct a US stock market portfolio that mimics these indices if you want to take a safer approach to invest in international stocks.
There are two ways in which you can invest in the US stock market from India. These options are listed below.
In case you choose to invest directly, you can open an overseas trading account with a domestic or foreign broker and buy stocks directly from the US market. On the other hand, if you are just getting started with international investments, it may be a better idea to invest in the US markets via mutual funds or ETFs. Whichever course of action you choose, remember to keep track of the US stock market live feed online so you have a better idea of how the market is behaving.
Now that you are aware of these basics, you’ll find it easier to create a plan and invest in the American stock markets. However, before you do so, keep in mind that you need to conduct enough research about the stocks you plan to invest in.
If you want to seamlessly invest in US Stocks digitally, you’ve got to check out Fi. Fi enables you to invest in top US companies — at industry-best forex rates. So you can own shares in Apple, Tesla, Microsoft, and so on! 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.
Yes, investing in the US stock market may be a good idea if you are planning to diversify your portfolio and include international stocks. However, like all market-linked investments, US stocks also come with their own risks. So, ensure that you balance your portfolio with a good mix of low-risk investments that facilitate capital protection too.
It is impossible to accurately predict how the prices of a stock will move in the future. And the same holds true for US stocks as well. A better investment strategy would be to invest small sums systematically in mutual funds that invest in international markets, including the American stock market. This way, you eliminate the need to time the market and get to benefit from rupee or dollar cost averaging, as the case may be.
The best way to invest in US stocks depends on your level of trading or investing experience, as well as your financial goals and situation. You can either choose to invest in these stocks directly by opening an overseas trading account with a domestic or foreign broker, or you can invest in US stocks indirectly via mutual funds or Exchange Traded Funds (ETFs).
To pick the best US stocks to invest in for diversifying your portfolio, you need to conduct adequate research and perform quantitative as well as qualitative analysis. Check the fundamentals of the company you are planning to invest in, particularly if you are focused on the long-term investment horizon.