Investing in US stocks not only helps you diversify globally, it also lets you invest in some of the world’s largest companies
There are several reasons why you should be investing in US stocks. We have shared five reasons to invest in US stocks in this video. In today’s technology driven world it is possible to invest in US stocks from India in a very simple manner and be a part of the global growth story. So let’s look at how to invest in US stocks from India?
Here are four ways:.
1. Invest directly in US stocks
You can do this by opening a US brokerage account either through technology platforms like Vested that offer this service, or a foreign brokerage that has a direct presence in India. At Vested, our goal is to allow you to invest in US stocks easily. To invest you do not need to pay any brokerage fees. Vested’s process is completely paperless and can be completed in a matter of minutes. All you need is your PAN number, an image of your PAN card, and address proof.
For investing in US stocks, you need to wire funds to the US. As an Indian resident, you are allowed to do this under the RBI’s Liberalized Remittance Scheme which lets you remit up to US $250,000 per year per person.
Another concern for investors who want to know how to invest in US stocks from India is that some of the stocks you may want to buy are very expensive. For example, the price of an Amazon share is over USD $3,400, which is more than ₹ 2.5 lakh. Don’t worry, you can now actually buy fractional shares, which means you can get started by investing as little as $1 in your favorite companies.
2. Invest in international mutual funds that invest in US stocks
In this case, you will be investing in funds of funds i.e. a local mutual fund that invests in a mutual fund available in the US. Note that there is no investment limit as an investment will be made in Indian rupees. However, this approach may turn out to be more costly. You will have to pay an annual expense ratio (fees charged to manage the fund). The expense ratio of these funds tends to be higher because apart from the general India fund management fee, it also includes an additional expense charged by the underlying international schemes they invest in.
3. Invest in ETFs traded on the US stock exchange
The other way you can invest in US stocks from India is through ETFs. ETFs refer to a collection of many stocks/bonds which are traded under one fund. They are similar to mutual funds. However, ETFs are traded on the US stock exchange with real-time pricing and provide an easy and cheap way to get exposure to a sector or a group of companies. One option you have is to buy an ETF on a platform like Vested. For example, Vested lets you invest in index ETFs like the Invesco QQQ Trust which is based on the NASDAQ 100 index. Some of the largest holdings of this ETF include companies like Amazon, Apple, Microsoft, Meta (Facebook), Netflix and Google (Alphabet), and also Tesla.
4. Buy ETFs in India that invest in US stocks
Another way to invest in US stocks from India is to buy ETFs available in India that invest in US indices like S&P 500 via an ETF such as the Motilal Oswal S&P 500 Index Fund. You can also invest in a fund of fund like Mirae Asset NYSE FANG+ ETF Fund of Funds. You can invest in these ETFs without opening a new US brokerage account. However, your returns might be impacted by tracking errors that these ETFs suffer from (we explain this in a video here. We hope that we have answered your question- How to invest in US stocks from India.
Our team members at Vested may own investments in some of the aforementioned companies/assets. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment or strategy will be suitable or profitable for an investor’s portfolio. Note that past performance is not indicative of future returns. Investing in the stock market carries risk; the value of your investment can go up, or down, returning less than your original investment. Tax laws are subject to change and may vary depending on your circumstances.
This article is meant to be informative and not to be taken as an investment advice, and may contain certain “forward-looking statements,” which may be identified by the use of such words as “believe,” “expect,” “anticipate,” “should,” “planned,” “estimated,” “potential” and other similar terms. Examples of forward-looking statements include, without limitation, estimates with respect to financial condition, market developments, and the success or lack of success of particular investments (and may include such words as “crash” or “collapse”). All are subject to various factors, including, without limitation, general and local economic conditions, changing levels of competition within certain industries and markets, changes in interest rates, changes in legislation or regulation, and other economic, competitive, governmental, regulatory and technological factors that could cause actual results to differ materially from projected results.