Since the pandemic, the world has shifted its way to buy, spend, invest, and preserve capital. Whether it’s a company or an individual, the investors have been more focused on preserving money rather than spending it. Hence to reduce their risk, investors are moving towards the direction of diversification.
However, the question that arises next is: Are you eligible to invest in international markets? The answer is yes, and you would be glad to know that the process of investing in the US stocks exchange is pretty simple and convenient!
Why should you invest in the US stocks market from India?
Recently, the Reserve Bank of India released an LRS scheme, a liberalised revenue Scheme that permits an Indian citizen to invest up to $250,000 in the US stocks market without any permission, making it a steady and stable market to invest in.
- In comparison to the Indian market, the US stock exchange is less volatile and jumpy.
- You get to invest and own stocks of superpower companies such as Apple, Facebook, Tesla, etc., which are doing very well and have a great name in the market.
- A diversified portfolio with innumerable options, and also you can invest in startups that are seeing higher growth than other stock markets.
Steps to invest in the US stocks market
1. Choose the international brokerage firm
Unlike Indian stock markets, to invest in the US stock exchange, you would have to choose an international brokerage firm to ensure easy and simple investment. The international brokerage firms have to get clearances from RBI to secure all the paperwork for you and conveniently invest your hard-earned money. They, in short, are a one-stop-shop, who handles your funds, documentation, trading, and other processes to make global investing seamless.
2. Account opening
Once you identify the brokerage firm, it’s time to open your account for foreign trading. It’s a simple, easy and one-step process that needs your details such as name, address, mobile number, and other credentials. Once your account is up and running, you are all set to trade in the US stock exchange.
In order to circumvent any legal troubles that can arise later, it is best to be safe than sorry. All your documents must be verified with the brokerage platform. Some of the documents you would need are ID proof, address proof, voter ID, PAN card, license, passport, utility and credit card bills, Aadhar card and other documents, which the brokerage firm will ask for.
4. Add funds to your account
Now that your account is up and running, it’s time to add funds to invest in the stock exchange and trade-in.
5. Adhere to the Reserve Bank of India’s rules and regulations
When investing in the US stocks market, you have to adhere to RBI’s rules and regulations and buy dollars for investing in the stock market. According to the rules, you can remit up to $250,000 in a financial year.
6. Foreign exchange rates
As you would be dealing in dollars from India, you have to keep a note of the dollar rate. It would be best suited to buy dollars at a low rate, and brokerage firms can help you secure that.
Things to remember before investing in the US stocks market from India
- Analyse: Before you deep dive into the world of global investing and trading, it’s best to analyse the market, if it would be a good choice for you, and if you have the funds to make decisions and trade-in.
- Extra charges: International investing requires a lot of funds, and those are not related to trading. The international foreign charges, account charges, currency conversion, brokerage, and many costs are associated with global investing.
- Long-term investing: You can’t decide to invest in foreign shares over the short term as many costs are associated. So to even reach the break-even point, and earn more than investment and make profits, you need to invest in a cost-efficient and smart manner.
- Understanding the market is very important: Understanding the trends and analysing markets and their financial statements is necessary. So, an informed decision is vital.
Investing in global markets adds exposure to your plate and an element of diversification. Though there are many pros and cons to investing in foreign markets, the international stock market builds your risk tolerance and lets you own stocks in the best companies abroad.
Now that you have a brokerage firm and an account, it’s time to go trading in the US stocks market. However, remember not to put all your eggs in one basket. Invest smartly and in moderation. Read about the terms and conditions, the market and invest in stocks with whatever budget suits your capabilities.