How to Invest in US Stocks from India| North Loop Official Blog
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12 Aug 2020

How to Invest in US Stocks from India

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US stock markets are one of the most diversified and developed equity markets in the world and home to some of the biggest as well as most innovative companies such as Apple Inc., Google, Tesla, Amazon and others. Investing in the US can give you exposure to these companies that have set global trends and also provide an opportunity to generate immense wealth along with bringing geographic diversification to your portfolio.

Reasons why investing in US stock markets is beneficial -

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The biggest economy in the world -

The US market is a highly lucrative market with the US economy accounting for about 14.93% share of the global GDP. It is the world's largest economy by nominal GDP and second-largest by purchasing-power-parity (PPP).

Presence of global companies -

The US share market has several high growth potential global companies. According to reports, there has been a 21% increase in the market capitalisation of US companies from March 2020 and 87 out of the current global top 100 companies have seen an increase in market capitalisation from March to June 2020. That shows that amid the significant volatility in markets, most investors like you are favouring the security of these world’s largest companies as they offer fast growth and better returns.

Technological dominance -

The Technological dominant companies on the US stock market offer a competitive edge due to their innovative nature. Popular global companies like Apple, Microsoft, Amazon, Alphabet, Facebook and Tesla now account for almost 41% of the NASDAQ that has more than 2700 member companies. Even amidst the current market situation, these companies have gained tremendously ranging from 16% for Alphabet to 279% for Tesla.

Strong consumer reach -

The American share market includes companies that have a worldwide reach and a strong global market share. Most of these are mega-cap companies which means that they have a market cap above $300 billion and a sizable market share. For example, companies like Amazon enjoy a strong customer base with more than 75% of people in the US using it for their daily purchases and needs.

All the above reasons make the US stock market a highly lucrative market for investment and long-term growth potential.

Let us now come to the ways by which you can invest in US stocks from India -

1.Open an account with foreign brokers -

Some foreign brokerages have a direct presence in India. These international brokerages permit you to set up an account and trade in US stocks, mutual funds etc. Some of these include US brokerages as well, with offices in India, where you can visit and open your overseas trading account by directly contacting them.

2.Open an account with Indian brokers partnered with foreign brokers -

Many Indian brokerages have a tie-up with foreign brokers. These Indian brokers facilitate investment in US stocks and enable you to open your overseas trading account with ease because of their partnership with US brokers.

3.Invest through digital platforms -

One of the easiest and most automated ways to invest in the US stock market is through digital platforms like North Loop. Here, you can open an account within 5 minutes, get global coverage as well as access to all major international equity markets. Also, other than investing by yourself, you get the help of professional financial advisors and 24*7 customer services which ensure that along with portfolio diversification, you enjoy a convenient investing experience.

4.Invest in Indian mutual funds with global equities or international mutual funds -

Investing in International mutual funds gives you a more diversified exposure to companies across the globe including US stocks like Google and Facebook. It can reduce your portfolio risk and help you enjoy a growth wave in specific segments that you may not have access to in the domestic Indian market. Moreover, these funds allow you to gain exposure and access to the American share market through qualified fund managers and experts who handle your portfolio and monitor opportunities in the US stock market.

Now that you know the process of investing in the US stock market from India, let us conclude by understanding about the Liberalised Remittance Scheme (LRS) under the Foreign Exchange Management Act, 1999 (FEMA).

Under the LRS, you are allowed to freely remit up to USD 2,50,000 per financial year for any permissible current or capital account transaction or a combination of both. If you invest in shares or mutual fund schemes in the US stock market, they are considered as capital account transactions, and the LRS rules allow you to retain and reinvest your income earned in that country.

You do not need to necessarily repatriate the accrued interest or dividends on the deposits and investments made in the US which means that the dividends you earn on your investments in US stocks can be retained abroad. Even the profits realized from investments in ETFs and real estate can be used abroad for other purposes without bringing it back to your domestic bank account.

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This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended be advice. You must obtain professional advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax, investment or other professional advice from North Loop or its affiliates. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date. All opinions expressed do not reflect the views of North Loop nor are endorsed by North Loop.