Indian investors have a special liking for some of the country’s leading companies such as Infosys, Reliance Industries, and Tata Consultancy Services. Understandably so. But you might miss out on something big if you focus only on your home market and the firms familiar to you.
Investing in different asset classes and markets is the key to generating healthy investment returns. And the US market has a large number of high-growth, world-leading companies, and that makes it an attractive option. Read on to learn about the various channels through which investors from India can invest in US stocks.
According to the provisions of the Reserve Bank of India’s Liberalised Remittance Scheme (LRS), every resident Indian can make foreign investments up to $250,000 (about ₹2 crores at the time of writing) per year. (This is how much money a single individual can send abroad in a year.)
But the process of investing in US stocks could be difficult for first-time investors. Thankfully, CoinSwitch, a crypto-first platform, now offers an easy, user-friendly platform to trade in the US stock market.
To start trading in India, you will need to open a demat account with any of the banks or brokerages. But in the US, trading accounts are managed by stockbrokers who function as middlemen between the investor and the stock exchange. So you need to tie up with one of them or you could simply use the CoinSwitch app to trade in US stocks.
US markets offer a number of investment options for foreign investors. You can choose the direct investment route, purchasing stocks and Exchange-Traded Funds (ETFs) directly, or you could invest indirectly through mutual funds.
Our platform includes almost all the leading listed American firms with billion-dollar market caps. CoinSwitch currently offers access to more than 5,500 stocks and ETFs listed on Nasdaq and the New York Stock Exchange. Read on to find out more about these options.
Simple as direct investing may sound, the stock prices of some of the leading US companies can be too expensive for Indian investors. This is where fractional investing comes in.
Fractional investing is a special feature offered by the US market. It allows you to buy small chunks of US stocks, thus making investing affordable.
For instance, the price of a single share of Apple costs $140.94 at publishing time (about ₹11,600). But you can buy a portion of Apple’s share for as little as $1 (about ₹82) through fractional investing using the CoinSwitch platform.
Let us now understand how fractional investing works, practically speaking. Our brokerage partner DriveWealth allows you to buy even a very tiny portion of an Apple share—up to the eighth decimal point (0.00000001). And you don’t need to do the math! All you have to do is decide the amount you want to invest in a particular share, and the corresponding number of units will be allocated to you. For instance, if a stock is priced at $41, and you decide to invest $100 in it, you will get 2.43 shares.
ETFs offer a less expensive investment option
Buying ETFs is another way investors can get exposure to the US market.
Exchange Traded Funds are a collection of shares or bonds that are grouped under one fund.
In other words, ETFs are similar to stocks that trade on stock exchanges. But typically, ETFs are considered less volatile compared to individual stocks. For example, the Invesco QQQ ETF will give you the opportunity to indirectly invest in the Nasdaq 100 Index of technology companies.
The lower expense ratio of ETFs makes them attractive. ETFs can also give you access to specific sectors of the US economy such as semiconductors or healthcare.
To conclude, first-time investors in US stocks may need some help to guide them through the investment process. That is where a platform like CoinSwitch comes in to make the process simpler for you.