Some of the world's most valuable stocks are found on Wall Street, including Google, Facebook, Tesla, Microsoft, Amazon, Apple, and many others. Owning these stocks allows Indian investors to diversify their portfolio, take advantage of more opportunities, and increase their profits. Diversification allows an investor to get the most out of most asset groups, and international exposure could give our portfolio that extra zing. The United States has some of the best stocks in the world, with fantastic success stories to back them up. Another important point to keep in mind is that the RBI's notification in the Liberalised Remittance Scheme (LRS) allows Indian residents to invest up to $250,000 (roughly Rs 2 crore) in foreign funds per year without any special permissions.
Best Performing US stocks- FAANG
Indians may begin investing in the US stock market by opening an overseas account with an Indian brokerage, a foreign brokerage account, or by investing in global equities through Mutual Funds.
The acronym "FAANG" refers to the stocks of five major American technology companies: Facebook, Amazon, Apple, Netflix, and Alphabet in finance (formerly known as Google).
These five stocks are widely praised for their strong historical track records and consistent leadership roles in their respective industries from an investment standpoint. The dominant market share in fast-growing industries and their relentless ability to innovate have made these five stocks an irresistible power. The FAANGs can spend actively on product growth and new ventures because they produce so much operating cash flow.
How to Buy US Stocks from India?
Direct Investment- Opening an Overseas Trading Account with a Domestic Broker
For any Indian retail investor, this is the most convenient choice, as many full-service fund houses enable them to invest in foreign stocks. However, it's necessary to keep in mind that, depending on the brokerage, this service may have certain limitations. Depending on the company, you could be limited in the investment vehicles you may use or the number of trades you may make, among other things.
Many domestic brokers work with stockbrokers in the United States. They serve as intermediaries and carry out your trades. Any of these brokers will help you open an overseas trading account.
Indian Brokers that offer US Stock investing include 5paisa, Vested Finance, ICICI Direct, Reliance Money, Kotak Securities, among others.
Direct- Opening an Overseas Trading Account with a Foreign Broker
You may also open a foreign trading account with a foreign broker who has a presence in India. Indian investors can open accounts with stockbrokers such as Charles Schwab International Account, Interactive Brokers, TD Ameritrade, and others and trade in US securities and mutual funds.
To open such an account, you may be required to submit a set of documents. Once brokerage and currency exchange costs are factored in, the cost of investing can be very high. As a consequence, before you open an account, make sure you understand all of the costs.
Indirect Way of Investing
Several mutual funds invest directly in international stocks. This is a cost-effective way to invest in global equities because investors would not need to open an account or make a minimum deposit. You can buy US ETFs from a domestic or foreign broker, or you can buy an Indian ETF that tracks international indices.
Things To Know Before Trading in US Stocks
If you want to invest in US-listed firms, you'll have to pay in US dollars. When investing in US stocks, you cannot transact in Indian Rupees.
There is an option to buy Fractional Shares. This means you can purchase shares in fractions as well as whole numbers. You may buy half a share or 1.5 shares in a publicly-traded firm in the United States.
A Double Tax Avoidance Agreement (DTAA) exists between India and the United States, which states that the same income cannot be taxed twice.
If you want to monitor the US markets, here are five top US indices to keep an eye on:
- RUSSEL 2000 index
- S&P 500 index
- Nasdaq Composite Index,
- Nasdaq-100 Index (NDX),
- Dow Jones Industrial Average (DJI)
The use of digital technologies and a simple regulatory structure have made it easier to invest across geographical boundaries. Investing in the US markets, which was once a distant dream for the average investor, is now a reality.
However, it's necessary to bear in mind that there are certain advantages and drawbacks to investing in foreign stocks. As a result, make sure to weigh all factors and spend in accordance with your financial objectives and risk tolerance.