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HOW TO INVEST IN US STOCK MARKETS FROM INDIA

Story Highlights
  • The US accounts for almost 55% of the World Stock Market.
  • The terms bull and bear were given to us by the US. They were the ones to provide us with this analogy.
  • The New York Stock Exchange was established on 8th March 1817 on Wall Street in New York.
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Have you ever wondered what would it be like to invest in foreign markets like NYSE and NASDAQ? If yes, then continue reading. If no, then continue reading anyways. I’m sure you’ll find some good knowledge in this article.

Now, in this article, we will reveal the methods by which you can invest in the US Stock Markets, or any other foreign market for that matter while sitting in India or any country that you are sitting in.

But before that let me throw light on some facts about the American stock exchanges:

  • The New York Stock Exchange was established on 8th March 1817 on Wall Street in New York. The parent company of the NYSE is Intercontinental Exchange. It is the biggest stock exchange on the planet with a market cap of its companies around $30.1 trillion.
  • The NASDAQ is the major stock exchange of America. It is short for the National Association of Securities Dealers Automated Quotations. It was formed on the 8th of February in 1971. It enabled the investors to trade securities via a computerized, quick, and transparent system. The total market cap of its companies stands at around $17.2 trillion.
  • The terms bull and bear were given to us by the US. They were the ones to provide us with this analogy.
  • The US accounts for almost 55% of the World Stock Market.
  • The costliest share in the world is Berkshire Hathaway class A, which is around $395,220. This share belongs to the US company Berkshire Hathaway.

Well that being said, let us begin with the topic.

There are broadly two ways to invest in the US stock market from India – Direct Investments and Indirect Investments.

  • Direct Investments can be done by opening a global trading account or an overseas trading account. You can hire either a foreign trader or a domestic one. Many of the domestic traders are associated with foreign traders, who may help you in making an overseas trading account. Each brokerage may have a different set of rules and restrictions that you have to look out for.
    You can also start an overseas account by directly reaching out to foreign brokers in India. Examples of some major foreign brokerages in India include Interactive Brokers, TD Ameritrade, and so on.
  • Indirect Investments include a few methods through which you can invest in the US stock market. The first one is to invest in Mutual Funds that invest in the US stock markets. For this method, you don’t even need an overseas trading account. These are the most commonly opted securities for foreign investments. A big advantage of mutual funds is that you don’t have to think a lot over which share to buy.

Next comes investing in Exchange Traded Funds or ETFs. These are similar to an Index fund but can be traded more easily. An ETF is a pool of various securities that imitate an index, sector, commodity, and so on. There are direct and indirect ways to invest in ETFs from India. You can buy a foreign ETF via a domestic or international broker or a domestic broker or purchase a domestic ETF that imitates foreign indices.

This method is quite new and on the rise. Investing from Apps. Many apps enable an investor to trade securities at the comfort of their home. An investor can trade securities on an international level.

Before you actually invest in foreign markets, make sure that you have a good amount of knowledge of them and that you are familiar with the rules and regulations of the markets. Also, keep on observing the daily movements of foreign markets to get a fair idea of the stock market. You should have good knowledge before investment, and The Thought Tree can help you in this as they are the best in this business. 

Next up, I’ll sum it up for you in a few steps.

  • Open an account

    As I said, in order to invest directly, you will require an overseas trading account. You can select from the number of brokerages in India that invest in US markets. You can register yourself with these brokerages easily with online registration. Your trading account will be created automatically once you are registered with the brokerage. It’s a simple and quick process
  • Submitting documents

To complete the process of registration, you will need to submit the specified documents. The documentation will be pretty basic and will require your ID proof with picture, and address proof. You can submit documents like your Aadhar card, Permanent Account Number card (PAN card), and such documents for your ID proof. For address proof, you can submit a Passport.

  • Adding funds to your account

    Once you have successfully created your overseas trading account, you will be required to add money to your account in order to trade securities. But before adding funds to the account, you need to be familiar with the RBI rules and regulations on foreign exchange, which is covered under Liberalised Remittance Scheme or LRS.
    To trade US securities, you will be required to buy US Dollars from an authorized dealer or bank in India. You can then proceed to buy and sell securities from the US stock market. You will be required to follow all the formalities and processes that LRS presents. 
  • Get the correct forex rate

    Always lookout for the best possible foreign exchange rate as it helps. A good investor always knows how to profit off on margins. To get a good exchange rate, you can contact the brokerage where you have opened an account as these brokerages have international tie-ups and can get low-rate forex rates from nationalized banks.

That’s it, guys! I suggest that you take up some kick-ass courses on the stock market in order to understand both – Domestic and Foreign Markets. This would help you in making better decisions regarding your investments.


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