When it comes to the ways of creating wealth, there are many from investing in equity, bonds, and fixed deposits to commodities and real estate for investors in India to foray in. Rather than creating wealth, if your focus is to multiply wealth, you can do it by making your money grow outside geographical limits and tangible assets. Investing in stock markets abroad is relatively new and gaining momentum.
For most investors seeking investment opportunities outside India, the US is the preferred destination, for it has one of the most developed, efficient, transparent, and flexible markets in the world.
How to Invest in the US Stock Market from India?
You can realize your dream of investing in valuable companies like Amazon, Google, Facebook, Nike, Microsoft, and Netflix with fractional shares. You can invest in the US stock market directly through online brokers or indirectly via exchange-traded funds (ETFs) and mutual funds.
Direct Stocks
Investing in stocks outside India helps diversify your portfolio. For the online trading of US stocks from India, you need a broker who is associated with US brokers or has a presence in a foreign country. To open an overseas trading account, you have to complete the KYC process by submitting your bank account details and digital copies of your PAN Card, and bank statement.
After opening a trading account, you need to transfer funds to start trading in US stocks under the Liberalized Remittance Scheme (LRS) of the Reserve Bank of India (RBI). You can invest an amount of USD 250,000 a year in US stocks.
Online trading | Image Resource: amazonaws.com
Mutual Funds
If you prefer to invest in the US market without opening an online trading account, you can do it by investing in mutual funds. They give you the benefits of diversification of the portfolio by geographical location and no requirement of fulfilling LRS formalities. Nevertheless, international mutual funds have their own set of risks.
Exchange Traded Funds (ETFs)
The other way of indirect access to US stocks is by investing in ETFs. Investing in an ETF gives you access to industries like healthcare or energy.
Indian investors are increasingly interested in theme-based ETFs today, which rather than investing in specific sectors, concentrate on developing topics like energy, electric vehicles, cloud computing, mobility, or even global ETFs that offer broader diversified exposure to the United States stock markets.
