Stocks listed in the United States stock exchanges have given phenomenal returns in the past decade. As investors, we would love to invest in US stocks – especially in the technology sector – in order to take advantage of these high rates of return on investment. However, investing in NASDAQ stocks from India has not been easy. There were too many regulatory hurdles. But these hurdles have largely been removed thanks to the digitisation of the financial processes. It is now quite easy for an Indian to invest in overseas stocks. In the blog post, we will find out some of the easiest ways to invest in US stocks.
There are two ways through which you can invest in US stocks:
- The easiest but inflexible way
- The special, flexible and most profitable way
For an Indian, the easiest way to invest in US stocks is by leveraging international Mutual Funds. Of course, this is not equivalent to investing directly, but there are many benefits if you go this route.
There are many AMCs that offer international mutual funds – either directly or in the form of Fund of Funds (FoF), where they pool investors’ money to other global mutual funds.
Funds like ICICI Prudential US Bluechip Equity Direct Plan, Nippon India Equity Opportunities Fund, DSP US Flexible Equity etc, enable you to get exposure to US stocks. And the benefit of going the mutual fund route is the fact you don’t need to worry about forex charges, regulations about LRS and other such overheads. Although the expense ratio of international mutual funds can be a bit higher than that of domestic ones, those expenses are nothing compared to forex or remittance charges.
There is a disadvantage to investing in US stocks via Mutual Funds. You can’t choose a specific stock as per your desire. Your money will be invested in only those stocks that are included in the mutual fund holding. So, there is a lack of flexibility in this regard. You are at the mercy of the fund manager. Whichever stocks he or she chooses will be in your portfolio.
If you want to directly invest in US stocks without depending on Mutual Funds, you can do so by leveraging GIFT IFSC. The Bombay Stock Exchange has partnered with GIFT City to make an international stock investing platform for Indians. Through this platform – which is called India International Exchange Limited (INX) Global Access or INX GA – resident Indians can now be able to invest in US and other international stocks directly.
INX GA provides Indian investors with a single platform using which they can connect with international brokers (including one in the US) associated with INX GA and open accounts with them. In this way, investors don’t need to hop on to one platform to open international trading accounts.
In terms of funding your account as well, you will be wiring money to INX GA. From there, you can use that fund to buy US stocks. This means your point of contact will be INX GA. In the backend, it is Interactive Brokers – the partner of INX GA – that will act as the custodian of your shares bought with the fund.
INX GA offers multiple benefits in terms of investing in NASDAQ stocks. Mutual Funds can’t match the flexibility provided by INX GA.
- INX GA Has All The Approval:
INX GA, unlike other sketchy international investment platforms, is a 100% compliant platform. You can invest in US stocks safely via INX GA without worrying about the legalities of outbound remittance. Just keep the limit of USD 250,000 in mind.
- Your Shares Are Kept With Multiple International Brokers of Repute
INX GA has partnered with multiple international brokers. In terms of investing in NASDAQ stocks, it has partnered with Interactive Brokers. Interactive Brokers is an SPIC (Securities Investor Protection Corporation) member, which means that your money – even if Interactive Brokers goes bankrupt – is insured for up to USD 500,000.
- From a Legal Point of View, The Assets of Interactive Brokers Are Viewed Separately From The Money Invested By You
When you invest via Interactive Brokers with INX GA, your money is not viewed as the asset of the broker. This means that even if Interactive Brokers shuts shop, YOUR assets will keep on being managed by some other entity. So there is minimal fear of monetary loss.
- Minimal Charges
One of the key benefits of investing in NASDAQ stocks through INX GA is the fact that you can enjoy minimal charges. You can enjoy ZERO deposit charges, ZERO maintenance charges and also one FREE monthly withdrawal. The bulk of the expenses you incur is in the form of a forex charge, which is more or less the same across all international investment platforms.
- Option To Own Fractional Shares of US Stocks
INX GA allows you to buy fractions of a whole share of a stock listed in US exchanges. Hence, you won’t be breaking the bank in your effort to own US stocks!
Remember: India & US Signed a Double Taxation Avoidance Treaty. You Will Be Paying Taxes On Your Capital Gains Just Once
When you earn a profit after you start investing via INX GA, don’t worry about taxes! You will be paying taxes on capital gains just once. So, as opposed to the popular narrative, investing in US stocks is actually quite cost-effective!
If you are looking for some other investment vehicles once you have started leveraging domestic asset classes, you can try investing in US stocks to further diversify your portfolio in a meaningful way.
If you have a question, share it in the comments below or DM us or call us – +91 9051052222. We’ll be happy to answer it.