Investing in foreign stocks has been a new trend that has seen an increase in investors all across India. This has several pros, one of which being high returns. However, it also comes along with certain consequences such as high brokerage charges. While you could invest large amounts in US equities, it is important to remember that the Reserve Bank of India has capped the maximum investment amount made by an Indian resident to $250,000.
Benefits of investing in US equities
One of the main reasons why many people invest in foreign stocks is the increased exchange rate that enables people to bag massive profits. Besides, several investors can aim to have diversified portfolio by investing beyond the country’s borders. Besides, the US stock market houses some of the most popular and profitable businesses such as Tesla, Google, Amazon, Facebook, General Motors, Apple, Microsoft, and many others. Such US stocks perform exuberantly well whose net worth continues to grow at a rapid pace as they are the next generation of innovators in the industry.
How to invest in US stocks?
To invest in US stocks from India can seem bizarre and complicated. However, the process is pretty straightforward and can be done in two broad ways:
1. Direct investment
To directly invest in US equities means that you would have to follow either of the below-mentioned processes:
Open a Demat Account with an Indian broker partnered with a foreign broker
Demat account opening method is considered to be the easiest as many fund houses are equipped to allow you to invest in foreign stocks.
Open an account with a foreign broker
There are several popular foreign brokers that allow investors from India to invest in US equities.
2. Indirect investment
You can indirectly invest in foreign stock through any of the following 3 ways:
You can buy US ETFs directly either through an Indian or an international broker. While investing in ETFs, you will not be mandated to maintain a minimum deposit balance.
This is one of the simplest ways to invest in foreign stocks as opening an international trading account is not necessary. Also, you also do not need to maintain a minimum balance in your trading account. Investing in mutual funds can also help you save the dilemma of picking the right and best stock to invest in.
Another way to invest in foreign stocks through several new-age apps that have been launched by startups.
While investing in US stocks can be attractive, it is important to gain some insight into some of the downsides too. To begin your investment journey in US equities, you could follow several pathways. While direct investments require you to maintain a minimum balance, indirect investments do not. Based on your preferences and convenience, choose the right pathway either after thorough research or with the help of an advisor.