Facebook, Google, Amazon, Apple, Netflix and Microsoft products have become an integral part of our lives. Popularly known as FAANG+M, they are a part of a niche group of companies, whose stocks rarely seem to fall. This makes it tempting to investors who want to diversify their portfolios. For Indians investing in foreign stocks it can seem impossible or out of reach. However, this is not the case. Investing in US stocks is uncomplicated and straightforward.
Here’s how you can easily invest in US stocks from India:
- First, you will need to open a trading account with a brokerage house. There are many options available these days. Many domestic brokers have partnered with international firms to make it more efficient. These platforms usually do not charge brokerage and provide expert-created portfolios. Many firms also have various plans such as basic or premium which offers a host of various options for investors.
- Once the firm and plans have been decided, investors need to submit a separate account opening forms along with their KYC documents.
- The next step would be to transfer the amount you wish to invest in the various stocks. This will be done through your domestic equity partner to the international partner who is providing the service.
For transferring funds to the international partner these are steps to be followed:
- A declaration has to be submitted under the Liberalised Remittance Scheme (
- LRS). This involves the form A2 which should be provided by your brokerage house.
- They will also provide a form for the Foreign Exchange Management Act (FEMA) declaration.
- The last step would be assigning your designated bank branch as an authorised dealer to carry out these transactions. Once the funds are processed you can start investing in the FAANG stocks.
Important points to remember
- Depending on the brokerage, services may have certain limitations. The company you choose could force you to limit the number of trades you make. So it is important to compare different options before choosing.
- RBI allows an investor to remit $250000 per financial year for investing abroad. Hence, all trades have to be made within this limit. Transactions can only be made in US dollars and not in Indian Rupees.
- It takes 2 days to transmit money from your bank account to your foreign trading account and 2 to 3 days to transfer from your trading account to your bank account.
- Investors have an option to buy Fractional Shares where they can purchase shares in parts or whole.
- Another effortless option would be to use mutual funds to invest directly in international stocks. It proves to be cost-effective as investors will not have to open an account or make a minimum deposit.
As accessible as investing in trades abroad is, it is that much risky. Make sure you know your trades and stocks and do not invest solely for the sake of diversification. Make sure to review your investments from time to time and follow the top indices in the USA to make sure you are updated on your stocks.