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What are the Different Ways to Invest in US Stock Market?

Oct-11-2022Blog by – Mr. Dhruv AjmeraRead Time: 4 Min.Word Count: 530
265What are the Different Ways to Invest in US Stock Market?

These days, several Indian investors are keen to invest in the US Stock Market, which is the largest stock market in the world. US stock investment gives you access to global companies, diversifies your portfolio, and gives better potential returns.

 

Imagine owning a stake in the shares of multinational giants like Facebook, Microsoft, Google, Tesla, Apple, and Nike! You can invest in the stocks listed on US stock market indices such as Nasdaq 100, Dow 30, and S&P 500.

 

There are two ways to invest in the US share market - Direct Investment and Indirect Investment. Let’s understand in detail.

 

Direct Investment

 

You can invest directly in the US stock market by opening an overseas trading account with an Indian or foreign stock broker. The Indian brokers have tie-ups with US brokers and act as an intermediary. If you don’t want an Indian intermediary, then you can look for a foreign broker who has a presence in India.

 

The charges and terms and conditions may vary across domestic and foreign brokers. You have to fulfil KYC formalities and fill out the forms mandatory as per the Reserve Bank of India’s (RBI) foreign trading rules. RBI allows Indian residents to remit up to $2,50,000 annually per person under the Liberalised Remittance Scheme (LRS). Hence, it is advisable to check for all details and do thorough research before opening an overseas trading account.

 

Indirect Investment

 

You can make an indirect investment through US-focused mutual funds or Exchange Traded Funds (ETFs). You do not need to open an overseas trading account.

 

US-focused mutual funds are primarily Funds of Funds (FoFs) that invest in international mutual funds. There are also local mutual funds that invest in global stocks. You can reach out to a mutual fund advisor to get more details.

 

You can also consider directly buying an Indian ETF with US stock indices. Another way is to buy US ETFs directly through an Indian or foreign broker.

 

However, do keep in mind RBI’s regulatory framework while investing in US mutual funds or ETFs. According to the RBI mandate, Indian mutual funds registered with SEBI can invest overseas with up to $7 billion while the upper limit for ETFs is $1 billion.

 

These days, there are also several trading mobile apps that allow you to invest in the US stock market at the tip of your fingers. However, make sure that these apps are registered with the Securities and Exchange Board of India (SEBI), or else you might become a victim of financial fraud.


Final Thoughts

 

The US stock market is a rewarding opportunity for investors who want to look beyond their Indian investment portfolio. However, foreign markets are vulnerable to socio-economic-political dynamics and currency fluctuation risks. You need to do an elaborate risk analysis before you invest in the US stock market. You must also understand RBI and SEBI rules and regulations regarding foreign investment.

 

Hence, it is advisable that you invest in the US stock market through a reliable and experienced stock broking agency such as Ajmera x-change. With its research-focused and customer-centric approach, Ajmera x-change can bring you a solid value proposition for your US stock investments. Get in touch to know more.

 

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