Introduction
How to invest in foreign stocks? The stock market goes up and down. One of the best ways investors can protect their assets in all situations is to have a diverse portfolio that can survive the shock of the global market.
Investing directly in foreign stocks may be appealing to investors for a variety of reasons, including this. ETFs and investment trusts can be used to make indirect investments in foreign stocks, but direct investors must take additional steps.
To invest in stocks such as META (Facebook), GOOGL (Alphabet), NFXL (Netflix), and TWTR (Twitter), investors need to open a foreign trading account with a broker. This can be done with large full-service and discount brokers associated with foreign brokers. ICICI Direct, HDFC Securities, Kotak Securities and Axis Securities offer investors the opportunity to open foreign trading accounts.
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How can Indians buy foreign stocks in the US stock market?
There are two different ways to invest in the US stock market from India.
- Direct investment
- Indirect investment via ETFs or mutual funds.
Direct Investments
By opening a foreign trading account with a domestic or foreign broker, you can invest directly in the US stock market. Consider fees before selecting the best app to invest in US stocks in India.
Opening a foreign trade account with a Domestic Broker
A lot of domestic stock brokers are connected to US stock brokers. They carry out your transactions and serve as intermediaries. Any of these brokers will allow you to set up a foreign trading account. To open this account, you might need to submit a few documents.
It’s crucial to remember that this feature has some restrictions. There might be limitations on particular investment products and the volume of transactions, depending on the securities company.
Considering brokerage fees and currency conversion fees, investment costs can be high. Therefore, make sure you know all the costs before opening an account.
Opening a ForeignTrading Account with a Foreign Broker
A foreign broker based in India is another option for opening a foreign trading account. Charles Schwab, Ameritrade, and Interactive Brokers are some of these brokers. Before opening an account, please be aware of the costs.
So, before selecting the best broker to invest in US stocks from India, do your homework carefully.
Indirect Investments
As with domestic investments, you can take indirect positions without investing directly in US stocks. Two options to consider are:
Mutual Funds
There is no need to open a foreign trading account or make a minimum deposit, as is the case with some stock brokers offering international direct investment.
There are many investment trusts that invest in US stocks and investment trusts.
Exchange-Traded Funds (ETFs)
You can also gain exposure to US equities by investing in ETFs. ETFs have direct and indirect routes. US ETFs can be purchased directly through domestic or international brokers, or Indian ETFs can be purchased with international indexes.
Investing via New-Age Apps
Since the advent of mobile apps for various services, a number of apps have been released by startups to assist Indian investors in making stock market investments in the US. Examples of these apps are INDMoney and Groww.
How Much Can I Invest in US Stocks?
The (RBI) has released guidelines under the Liberalization Income Scheme (LRS) that allow Indian residents to invest up to $ 250,000 (Rs. 1.9 Cr) a year without special permission.
Let’s examine some of the factors that should influence your decision to invest in US stocks as well as the costs involved now that you are aware of how to do so from India.
What are the Different Costs While Investing in US Stocks?
Tax Collected at Source
All remittances over 7 lakh Rupees are subject to 5% TCS (Tax withholding). This applies to amounts in excess of Rs 7,00,000, not total amounts. If the taxpayer submits an ITR, TCS can claim it as a refund.
Capital Gains & Dividend Tax
In the United States, dividends to Indians are taxed at 25%. The Double Taxation Prevention Agreement (DTAA) allows investors to offset taxes paid abroad so that they do not have to pay taxes twice for the same income. No capital gains tax is paid on investments in the United States.
However, you’ll have to pay taxes on Indian capital gains.
Banking Fee
Most banks charge exchange rate and transfer fees. In addition, there may be a one-time account setting fee.
Brokerage charges
The broker charges a fee for buying and selling stock.
Foreign Exchange Rate
The price and the number of units assigned can vary depending on the rate of exchange of buying or payment.
Conclusion:
Foreign stock investing is straightforward but requires a sizable investment. Additionally, there are apps for specific brokerage houses that let you invest instantly in foreign currencies directly.
As a result, this procedure is easy. Two additional strategies exist for purchasing foreign stocks. Visit a fund house in India that deals with foreign stocks or ETFs.
