In modern times, investing in the U.S. stock market is a huge and exciting opportunity for Indian investors. With global tech giants like Apple, Amazon, Google, Microsoft, and Tesla leading in technologies and innovation.
Many Indians want to invest in the U.S. stock market to earn good returns and gain international exposure. But how can someone in India invest in the U.S. stock market?
In this article, we’ll guide the step by step process of investing in the U.S. stock market from India in simple language.
Invest in the U.S. Stock Market from India
Let’s go through a step-by-step guide on how to invest in the U.S. stock market, especially if you’re living in India.
Choose a Method to Invest
There are mainly two methods of investing in the U.S. stock market from India
Direct Investment via International Brokers
These platforms let you create a U.S. stock market account even if you live in India. Once your account is set up, you can buy and sell shares of American companies directly just like people in the U.S. do.
Some popular international brokers include:
- Interactive Brokers: One of the most trusted and well-known platforms used by people worldwide and they operate in India and allows users to invest in the U.S. stock market.
- Charles Schwab: They are known for their strong customer support, helpful tools, so that people can invest easily.
- Firstrade: It allows international investors to invest and offer commission-free trading, which can be really helpful for beginners with their easy to use tool.
Investment via Indian Brokers with International Partnership
Some Indian brokers have partnerships with the U.S. brokers to provide access to invest in the U.S. stock market, so that you can easily invest from India.
Some popular Indian brokers include:
- Zerodha: It is one of the largest stock broker platforms in India, which allow low-cost, and transparent models for investment.
- Groww: Best user friendly and digital broker platforms for investment in the U.S. stock market.
- ICICI Direct Global: It also allows Indian investors to invest in the international market through a user-friendly platform.
Complete KYC and Open an Account
It is compulsory to complete KYC (Know Your Customer) formalities with every broker, whether it’s an Indian or international broker and once you’re done with KYC, you may be asked for following documents like:
- PAN card: It is mainly used to track your investment and income from international stocks.
- Adhaar card or passport: It is used for identity and address proof, and passport for foreign exchange when you’re using the U.S. from India.
- Address proof: It helps brokers confirm your identity, and prevent frauds while investing.
- Bank statement: Used to verify your bank account details for fund transfer and confirm your financial status.
- Photograph: It helps brokers to confirm that the person opening the account matches the documents provided.
Fund Your Account
Once you have created your account and finished the KYC (Know Your Customer) formalities, the next step is to fund your account. For that:
- You need to send money from your Indian bank account to your U.S. brokerage account so that you can start investing in the U.S. stock market.
- This money transfer process is done under a guideline called Liberalised Remittance Scheme (LRD), which is set by Reserve Bank of India (RBI) guidelines.
- And to complete the transfer, you need to fill out a form called Form A2 and also give a signed proof of statement that shows where the money is coming from.
Start Investing in the U.S. Stocks
Once your funds are transferred to the U.S. brokerage account, then you can finally start investing in the U.S. stock market from India.
But sometimes, it can be really confusing to some people, especially beginners to choose where to invest. Here are some common investment options you can consider:
- Individual Stocks: You can invest your funds in individual stocks in well known companies like Apple, Tesla, Google etc., to get high returns.
- Exchange Traded Funds (ETFs): It is ideal for beginners, where you can start with a lower amount, which helps you reduce the risks.
- Mutual Funds: You can’t usually invest directly in the U.S. market but some mutual fund companies like, Axis NASDAQ 100 Fund of Fund, Kotak NASDAQ 100 Fund of Fund etc., offer special international funds that lets you invest through Indian brokers without opening a U.S. account.
- Fractional Shares: It allows you to buy a small part of some expensive stocks and it is ideal when you want to start with a smaller amount of money.
What are the Costs Involved?
While investing your money in the U.S. stock market from India, it’s important to be aware of the costs involved during this process and here are some common ones to keep in mind:
- Brokerage Fees: Some brokers ask you to pay a small fee every time you buy or sell stock but some may let you trade without charging any fees.
- Currency Conversion Charges: The bank or the service you use to convert Indian Rupees (INR) into U.S. Dollars (USD) may take a small fee or offer a lower exchange rate.
- Remittance Fees: When you have to send money from India to the U.S. then the bank or service you use may charge a fee for transferring your money.
- Taxes: You may also need to pay taxes in both India and the U.S. while investing in the stock market.
Pros and Cons of Investing in the U.S. Stock Market
| Pros | Cons |
| Access to global companies and innovation | Different fees and taxes |
| Spread your investment outside your country | High transactional costs |
| Possibilities to earn in USD | Different market timing and time zone |
| ETFs and fractional shares offer more flexibility | Limited knowledge about the U.S. market |
| Long-term growth and high returns | Regular and extra paperwork under LRS |
Conclusion
As we discussed above, investing in the U.S. stock market from India has become much easier now, thanks to technologies and user-friendly platforms which makes it even more possible.
There are some costs involved, but the potential benefits can be of high returns.
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Investment in the U.S. Related FAQs
Is it legal for Indians to invest in the U.S. stock market?
Yes, it is absolutely legal under the Liberalised Remittance Scheme (LRS) of the RBI guidelines, which allow Indian residents to transfer up to $250,000 per financial year for investment purposes.
What are the different ways to invest in the U.S. stocks from India?
You can invest through international brokers (like Interactive Brokers, TD Ameritrade, Charles Schwab), and Indian brokers with tie-ups (like ICICI Direct, Groww, Zerodha), or through U.S. stock ETFs listed in India.
Are there any taxes involved for Indian investors?
Yes, U.S. shares are taxed at 25% (deduced at source), and capital gains may be taxed in India. Double taxation can often be avoided under the India-U.S. DTAA (Double Taxation Avoidance Agreement).
What are the documents required to start investing?
Typically, you will need a PAN card, Adhaar card, a bank account, photograph, and KYC documents. Some brokers may also ask for a signed LRS declaration form.