Being an Indian investor, you may think that you can only invest in the Indian stock market. However, that’s not the case. Buying the stocks of foreign companies, such as the ones listed in the U.S. stock market, is perfectly legal. If you’re interested in U.S. stocks, then here’s everything you need to know about how to invest in the U.S. stock market from India.
There are as many as 4 different ways through which you can invest in the U.S. stock market. Here’s a brief overview of each of these methods.
In addition to allowing you to invest in the Indian stock market, Motilal Oswal also gives you the power to buy U.S. stocks. This service is being provided by Motilal Oswal in partnership with Stockal.
All that you need to do to get started is register your Motilal Oswal trading account online by visiting the official website and completing the KYC verification process. Once that is done, an overseas brokerage account will be opened for you, which should take about 1 to 2 days. Upon successful activation of the account, you can proceed to add funds to it, which will be in USD, from your Indian bank account.
Keep in mind that according to the Reserve Bank of India’s Liberalized Remittance Scheme (LRS), you can only add funds up to $250,000 in a year. Once your overseas brokerage account is funded, you can proceed to purchase your favorite U.S. stocks.
Let’s now take a look at the second method in this ‘how to invest in U.S. stocks’ guide. The National Stock Exchange (NSE) has recently launched an international exchange, the International Financial Service Centre (IFSC). Through NSE IFSC, you can invest in up to 50 different stocks of U.S. companies.
To get started, you would have to first open a trading and demat account with one of the stockbrokers registered with NSE IFSC. Once that’s done, the next step is to transfer funds from your Indian bank account to the NSE IFSC-registered stockbroker’s account. You can use the funds that you transferred to buy stocks of U.S. companies.
Alternatively, if you don’t wish to go through the hassle of opening a separate overseas brokerage account to invest in U.S. stocks, then this method may just be the perfect option for you.
Many Indian fund houses have come up with mutual funds that are designed to invest in the stocks of various U.S. companies. By purchasing units of such mutual funds, you effectively gain exposure to such stocks. However, the only disadvantage to this method is that you will not be able to invest in individual stocks.
That’s not all. Since you would effectively be investing in a basket of different stocks, you may end up with exposure to U.S. stocks that you don’t want to as well.
We’ve now come to the final method in this ‘how to invest in the US stock market from India’ guide. Exchange Traded Funds are mutual funds that are traded on an exchange like stocks. You can purchase and sell units of an ETF just like you would do a stock. Many fund houses have launched U.S.-based Exchange Traded Funds that are designed to mimic global indices such as NASDAQ, NYSE, and more.
With this, you must now have a clear idea of how to invest in U.S. stocks from India. Investing in global stocks in addition to those in India is a great way to diversify your portfolio. Since the U.S. markets behave drastically differently from the Indian markets, you not only gain the ability to accelerate the wealth creation process but also get to reduce your investment risk.
That said, before you proceed to take any steps to invest in the U.S. stock market, it is important to first open a Demat account and a trading account in India. Visit the website of Motilal Oswal today to open one for free.
Once your account is active, you can proceed to get it registered for investing in U.S. stocks. In addition to that, with your Motilal Oswal trading and Demat account, you can also invest in upcoming IPOs of Indian companies apart from existing companies listed in the Indian stock market.