US Stock Market Investing for Indian Investors: Tips and Strategies

When it comes to geographically diversified portfolios, the US stock market is one of the best options to invest in. The nation is home to some of the top technological companies as well as other wealth-generating businesses that present excellent investment prospects. 

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For a very long time, the US stock markets have outperformed the Indian stock markets. They also give additional individual opportunities to diversify their investments in overseas stocks. It is also a tempting potential due to the minimal correlation between the Indian and US equity markets.

Some of the greatest firms in the world are represented on the American stock market. Due to their portfolios’ ideal diversification, investors have a higher possibility of receiving larger returns and reducing their risks. One can invest in renowned US firms through Fi.Money at the most competitive exchange rates. Consequently, one may be an owner of stock in companies like Apple, Tesla, Microsoft, and more! 

With the globalization of markets and the Reserve Bank of India’s liberalization of its foreign remittance policies, investing in foreign stocks has become relatively simple.

There are two alternative ways for an Indian person to participate in the American markets: One is through direct investments in the form of stocks, and the other is through indirect investments using mutual funds and ETFs.

  • Investments made directly in US markets

One can open an overseas trading account under the category of direct investments with a domestic broker who has a partnership with stockbrokers in the US or an overseas trading account with a foreign broker who has a presence in India. In the former, domestic brokers function as middlemen when executing trades because they have connections to American brokers. Before choosing this option, one should, however, carefully review the costs. Typically, they are a bit higher. Everything relies on an individual’s investment goals and frequency of transactions in US stocks.

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  • Investments made indirectly in US markets

There are two different types of mutual funds that invest in international markets. The first is a fund of funds, a local mutual fund that invests in a foreign mutual fund, and the second is a local mutual fund that invests in a foreign stock. Mutual funds that invest in foreign funds typically have higher expense ratios. A management fee for the underlying overseas fund is charged for funds in addition to the management cost for the Indian fund.

Exchange Traded Funds, or ETFs for short, are comparable to mutual funds in that they are essentially a collection of different equities that are traded under one fund, but unlike mutual funds, ETFs are traded on exchanges with real-time pricing, much like stocks are. Investor losses are possible with direct stock investments and require a certain level of skill. 

While opening an international trading account with an Indian or foreign broker can be a hassle, there are a number of indirect ways to participate in foreign markets. Investing in exchange-traded funds or mutual funds that invest in overseas companies is another option. One can buy the units of several India-based mutual funds and ETFs, which either invest exclusively in US stocks or have a broad worldwide portfolio.

Mutual funds with exposure to US markets are another option. Mutual funds have their own set of risks and rewards, but they also offer advantages, including geographic and portfolio diversification. Changes in the nation’s market and volatility in the exchange sectors may have an effect on the fund’s overall performance. These funds are also subject to ongoing fees and costs associated with the global plan in which they are invested.

  • Conclusion:

It is preferable to begin modestly and gradually increase the number of securities in the portfolio. One can diversify their portfolio by investing in international markets. But, before investing in US equities, one should carefully consider the risk associated. One must also accept the risk of currency changes because the US market and the Indian market are not comparable. 

Recently the Indian government introduced a 20% TCS on all foreign remittances. This comes into effect from July 1st 2023 onwards. So if you’re looking to invest in the US stock market, you can try Fi.Money.

Fi.Money simplifies the world of US Equities with an easy-to-use interface. In addition to in-app explainers, Curated Collections (like All-Time Favourites) can help new investors decide. Experienced investors have the ability to explore further, use numerous filters (such as stock price), and choose from a variety of international possibilities. Furthermore, Fi.Money offers free brokerage for the quick purchase of US Equities. The best part? If you make your purchase during the trading hours, your purchase order is placed in real-time, so you don’t have to worry about the price of your order changing by the time the order is placed.

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