Frequently Asked Questions about US Investing and Vested
Vested uses 256-bit encryption and Secure Sockets Layer (SSL) to ensure the security of our platform and protect your information. We also employ state-of-the-art login methods, automatic logouts, and ID verification to help prevent unauthorized access.
Yes. We follow the RBI’s Liberalized Remittance Scheme (LRS) guidelines. Instituted by the RBI, the LRS is a set of policies that governs the maximum amount and purposes of remittance. Under the LRS, an Indian resident can send up to USD $250,000 abroad annually without seeking approval from the RBI. The LRS has made it easier for Indian residents to study abroad, travel, and make investments in other countries.
Your assets are held at a 3rd party custodian, and we do not ever touch or hold your money. If Vested shuts down, you would still have access to all your cash and securities, as we will ensure that direct DriveWealth access is established for you to continue to buy or sell securities. In the highly unlikely event that both Vested and DriveWealth shut down, your SIPC insurance kicks in. Each brokerage account opened with Vested is insured by SIPC (Securities Investor Protection Corporation) up to $500,000. This includes $250,000 in cash. For more details, please read here.
Share ownership verification works slightly differently in India than in the US. Shares are held by a third-party custodian in the ‘street name’ of the broker rather than the underlying investor. This is why you do not receive direct emails from the custodian regarding your holdings. As per SEC guidelines, if you want to confirm the share ownership for your Vested account, you can contact DriveWealth, our broker partner, directly at email@example.com.
For our users there are two types of taxation events: (1) Taxes on investment gains: You will be taxed in India for this gain. You will not be taxed in the US. The amount of taxes you have to pay in India depends on how long you hold the investment. 24 months is the long-term capital gain threshold and the tax rate is 20% with indexation benefit. Below 24 months is short-term capital gain and is taxed according to your income tax slab (2) Taxes on dividends: Unlike investment gains, dividends will be taxed in the US at a flat rate of 25%. Fortunately, the US and India have a Double Taxation Avoidance Agreement (DTAA), which allows taxpayers to offset income tax already paid in the US. The 25% tax you already paid in the US is made available as Foreign Tax Credit and can be used to offset your income tax payable in India. Read more about how taxes will work here!
On the Vested platform you can invest in either full or fractional shares. When your investment is in full shares, our broker partner (DriveWealth) will route the orders to market centers on an Agency basis. When the investment is fractional shares, our broker partner will satisfy the order from its own account, on a Principal basis, at the National Best Bid or Offer (NBBO). NBBO means that DriveWealth cannot add a margin to the price. So, if the market price of 1 share of Amazon is $1,000, and you purchase 0.1 share of Amazon, you will pay $100 for the 0.1 share. Any orders for both full or fractional shares will be executed via both methods, part as Agent and part as Principal.
YES! Under the Liberalised Remittance Scheme (LRS), the Reserve Bank of India (RBI) allows an Indian resident to invest up to USD $250,000 per year in overseas markets.
Instituted by the RBI, the LRS is a set of policies that governs the maximum amount and purposes of remittance. Under the LRS, an individual can annually send up to USD $250,000 abroad without seeking approval from the RBI. The LRS has made it easier for Indian residents to study abroad, travel, and make investments in other countries. For more information, you can read more here.
For the most up to date regulations regarding the LRS please visit here. Please see article 6(iii) for specific LRS regulations regarding investments in equity.
You will need a proof of ID and proof of address. Note: All bills and statements must be within the last 3 months and must have your name on it). The whole process is paperless and can be completed in minutes.
Investments in US equities must be made in USD. You must wire (remit) USD to Vested’s partner bank in the US to fund your account. In order to do this, you must fill out an LRS form (it’s called the A2 form) and submit it to your bank. Do not worry! We will make this process easy for you. When you sign up on our platform, we will guide you through this process. Please note that there are costs involved in the fund transfer process. These costs vary according to the bank you use. For example, there is a fixed cost of between INR 500 – 1500 per fund transfer.
You can withdraw cash from your account any time. All you have to do is initiate the withdrawal process from the ‘Withdrawal’ tab on the platform. The money will be wired directly to your bank account in India. It may take 3 – 5 business days for the wire to come through.
Please note that the remitting bank will charge a fee for the transfer. We do not take any cut from this fee and are working towards reducing it substantially. Currently this fee is approximately USD $11. Thus, you must have a minimum of this amount to make a withdrawal.
If your current US investing platform uses Drivewealth, you can move your account very easily! You just need to fill up this one-page form and share it with us. If you have any questions, please drop us an email at firstname.lastname@example.org and we will be happy to help.
In accordance to the LRS, an individual can remit a maximum of $250,000 USD per year for investments.
While we do not offer mutual funds, we do offer ETFs on our platform. ETFs are similar to mutual funds and provide diversification advantages by spreading investing across multiple stocks or asset classes. ETFs are highly liquid and offer transparent pricing as they are traded on exchanges like a stock. On Vested’s platform, we have curated a list of ETFs so that you can gain exposure to exciting themes such as the China growth story, global stock exposure and the rise of the internet. To read more about ETFs, click here.
Unfortunately, the RBI does not currently allow money remitted under the LRS to be used for trading derivatives or any kind of leveraged products.
Yes. NRIs that are not US citizens or US residents can use the Vested platform! In order to onboard you, we will require your PAN card, an address proof (bank statement) and tax ID from the country in which you are currently a tax resident.
Currently there are 3 ways in which you can add funds:
- Transfer from your bank account in India
- Wire transfer funds from your non-Indian bank account
- Use a money transfer company such as Currency Cloud or Transferwise to transfer funds from your non-Indian bank account
The beneficiary details are available under the Fund Transfer section on the platform.
You will be taxed as per the laws in the country in which you are a tax resident. For example, if you are a tax resident of the UAE, you will pay taxes as per UAE tax laws.
Vested is an SEC registered Investment Adviser. By law, it is our job to act in your best interest. For more information, please see our SEC registration page here. Please note that registration with the United States Securities and Exchange Commission (SEC) or any state securities authority does not imply a certain level of skill or training.
Furthermore, we partner with Drivewealth, an SEC registered broker dealer that is a member of FINRA and SIPC.