Best Stocks To Invest In Us Market – In this post, we will help you understand how to buy US stocks and get some amazing US stocks here from India!
In this article, we will tell you how to buy US stocks and get some US stocks straight from India! But wait… First, let’s see why people invest in the US stock market.
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One of the fundamental reasons to invest in the US is to protect your wealth from erosion due to the increasing value of the US dollar. Every time the rupee falls against the dollar, you will know you have a growing amount of wealth.
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Investing in US stocks makes even more sense if you plan to live in America or have children studying abroad. You can also participate in one of the most mature economies in the world and earn interest in dollars.
Whether it’s Facebook, Google, McDonald’s, KFC, or NIKE, you already love and know these American companies well. You have used their product and you can trust them. Investing in companies you understand always helps you make smarter decisions.
America’s gross domestic product is nearly 10 times larger than India’s. This means you are participating in a much larger market, with US listed companies accounting for almost 35%-40% of global market capitalization.
The Dow Jones and NASDAQ outperform our modest NIFTY and SENSEX. So much so that many times the US market is rising when ours is falling.
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Gains made on the sale of US stocks are known as capital gains. Generally, capital gains are taxed according to the holding period. You will be pleased to know that US stock sold for profit is not subject to US tax.
This is because India and the US have a double tax treaty. This means you only have to pay capital gains tax as per Indian tax rules.
However, dividend income is taxable in both countries. That said, let’s look at the tax implications of investing in US stocks from India.
Just as we have SENSEX and NIFTY traded on NSE and BSE in India, the US market has its own indices and stock exchanges.
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DJIA is one of the oldest and most popular indexes in the US. It consists of the top 30 reputable companies that are generally leaders in their industry.
It is also one of the most followed indices in the US. The S&P500 is a list of the 500 largest companies that are publicly traded on US stock exchanges.
The companies that make up the S&P 500 and DJIA are then traded on the NYSE. It is the largest stock exchange in the world with a market capitalization of US$ 26.2 trillion (2021). It has more than 2,400 registered companies worldwide. This includes small businesses and blue chip companies.
The NASDAQ is the 2nd largest stock exchange in the world with a market capitalization of USD 19.4 trillion (2021). It is home to more than 3,500 companies that together make up the S&P 500 and the DJIA.
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You can invest in US stocks from India in one of two ways. One is direct, through a broker app like Cube which allows you to invest in the US market from India. Two indirectly through mutual funds.
You need a broker to help you trade US stocks from India. You need to set up a trading account with a brokerage house and do KYC by providing your PAN number, bank account, voter ID, bank statements etc.
After that, you need to transfer funds to your US stock trading account. Note that you will be able to invest in US stocks from India through RBI’s Liberalized Remittance Scheme (LRS).
There are formalities you must follow to ensure that you comply with the RBI’s LRS norms. LRS allows you to invest up to $250,000 per business year in the US market from India.
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Brokerage firms can be domestic or have ties to brokers from the US. or a foreign broker who has a direct presence in India.
International funds offer an alternative way to add US stocks to your portfolio. They eliminate the need for LRS formalities and are available in applications such as Cube.
In short, you can invest in international funds like any other mutual fund. There are trade-offs. For example, the potential returns you earn will be in line with the risk profile of the fund.
ETFs are very similar to mutual funds. They are a collection of securities which includes stocks, bonds, etc. ETFs can be another way to invest in the US stock market. You can buy ETFs available in India and invest in the US stock market.
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Of course, there are some risks that you should consider. It’s not easy keeping up with foreign markets without an app like Cube Wealth to relieve your stress. You also have to consider higher risks as your losses and gains will be expressed in dollars.
Liquidity is also less than that of Indian investment. Higher fees and brokers can also be a concern if you are not a Cube user. You also need to pay attention to global factors and economic conditions that can affect the performance of US stocks.
To make sure those risks don’t get to you too much, you can also use some pointers from our episode of Cube Wealth on how to build positive investing habits.
Yes, you can invest in the NASDAQ from India. However, you can only do this through a brokerage firm and using a trading account.
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NYSE – New York Stock Exchange and NASDAQ – National Association of Securities Dealers Automated Quotations are the main stock exchanges in the US.
The risk is higher when investing in US stocks because you are investing in a market you can’t always get into. The lower liquidity and the fact that your losses will also be in USD add to this.
Whether you should invest in US stocks in the short term depends on many factors, such as your objectives, risk appetite and investment amount. Please consult a Cube Wealth advisor before making any investment.
Yes, Indian investors can buy NYSE-listed US stocks using a reliable and intuitive app like Cube Wealth. The Cube allows you to invest in US stocks on your own or with the best advice from RIA Rick Holbrook, who currently manages ~$130 million in assets for HNI.
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Indians can invest up to $250,000 (1.85, 68, 750) in the US equity market per financial year under current RBI LRS rules.
Cube Wealth Investment Quote “Earn as much as you can, save as much as you can, invest as much as you can, give as much as you can.” John Wesley
Rishabh P Nair is the Brand Content Manager at Cube Wealth, a financial freedom app with the Perfect Portfolio smart planner. Rishabh has been weaving stories for over 10 years and is proud to build a brand with a strong identity.
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