Investing in the US stock market is an exciting opportunity for Indian investors seeking diversification and higher growth potential. With global giants like Google, Amazon, and Tesla dominating the financial landscape, the US market offers a unique chance to benefit from the world’s largest economy. In this comprehensive guide, we will address all aspects of investing in US stocks from India, making it easy for beginners and seasoned investors alike to get started.
Why Invest in the US Stock Market?
Diversification and Growth Potential
The Indian stock market offers good returns, but investing in the US stock market allows you to diversify and reduce risks. The US market is home to many of the world’s biggest companies, providing immense growth opportunities. Additionally, investing in USD can minimize risks against the depreciating value of the rupee.
Performance Comparison: Sensex vs. S&P 500
Here’s how the Indian and US markets compare:
Five-Year Comparison:
Sensex: 101% growth (15% annual return).
S&P 500: 91% growth + 17% USD appreciation = 18% annual return.
Ten-Year Comparison:
Sensex: 245% growth (13% annual return).
S&P 500: 220% growth + 47% USD appreciation = 17% annual return.
| Time Period | Sensex Growth | S&P 500 Growth | USD Appreciation | Total S&P 500 Return |
|---|---|---|---|---|
| 5 Years | 101% (15%) | 91% | 17% | 18% annually |
| 10 Years | 245% (13%) | 220% | 47% | 17% annually |
How to Invest in US Stocks from India
Step 1: Moving Money from India to the US
To invest in US stocks, you need to transfer funds under the Liberalized Remittance Scheme (LRS), which allows Indian residents to transfer money up to $250,000 annually.
Process:
Choose a platform. Apps like INDmoney simplify the process by offering zero transfer fees and competitive exchange rates.(Note: This article is not sponsored by INDmoney. This is our recommendation only.)
Link your bank account and transfer funds.
Your funds are transferred to a US brokerage account (e.g., through partners like State Bank of Mauritius).
Pro Tip: Unlike banks that charge high transfer fees (₹1,000-₹2,000), platforms like INDmoney provide cost-effective options with transparent GST charges.
Step 2: Opening a US Brokerage Account
You’ll need a brokerage account to buy and sell US stocks. Platforms like INDmoney partner with reputable brokers like DriveWealth.
Key Features:
Fractional Shares: Invest in high-value stocks like Tesla by purchasing fractional shares.
ETFs: For beginners, ETFs such as Vanguard’s S&P 500 ETF offer diversified exposure.
Ease of Use: Transactions are seamless and user-friendly.
Step 3: Buying US Stocks
Once your funds are transferred, here’s how you can buy stocks:
Search for the company you want to invest in.
Check details like stock performance and company background.
Enter the desired amount or number of shares (fractional shares are allowed).
Confirm your purchase.
Step 4: Selling US Stocks
Selling stocks is straightforward:
Select the stock you wish to sell.
Enter the amount or number of shares.
Place the sell order, which will execute during US market hours.
Step 5: Bringing Money Back to India
When withdrawing funds:
Fee: $5 per withdrawal. To save costs, withdraw funds in bulk.
Process: Funds are transferred to your Indian bank account.
Tax Declaration: Declare the income while filing your tax returns.
Charges and Taxes
Platform Charges
Buying and Selling: Free on INDmoney.
Withdrawal Fee: $5 per transaction.
Taxes
| Tax Type | Description | Rate |
| Short-Term Capital Gains | Sold within 2 years, taxed as per your income slab | Varies by income |
| Long-Term Capital Gains | Sold after 2 years, fixed rate | 20% |
| Dividend Tax | Withheld in the US, claimable under tax treaty | 25% |
| TDS | Transfers above ₹7 lakh | 5%, claimable |
Capital Gains Tax:
Short-term (within 2 years): Taxed as per your income slab in India.
Long-term (after 2 years): Fixed at 20%.
Dividend Tax: A 25% withholding tax in the US, claimable under the US-India tax treaty.
TDS: Transfers above ₹7 lakh attract a 5% TDS, claimable during income tax filing.
Tax Documentation: INDmoney provides all necessary documents for seamless tax filing.
How to Get Started with the INDMoney App
Step-by-Step Guide
Download and Register: Install the INDMoney app and create your profile.
Complete KYC: Upload your PAN and Aadhaar for verification (takes 1-2 days).
Open a US Stocks Account: Follow the app’s instructions to set up an account.
Add Money: Link your bank account and transfer funds using UPI or Net Banking.
Search for Stocks: Use the app’s search bar to explore companies and ETFs.
Buy Stocks: Enter the desired amount and confirm your purchase.
Features of INDMoney for US Stock Investing
No Commission Fees:Â Buy and sell stocks without extra charges.
Real-Time Updates:Â Access the latest stock prices and insights.
Tax Reports:Â Simplified reports for easy tax filing.
Tips for Beginners
Start Small:Â Invest a small amount initially to understand the process.
Research Thoroughly:Â Learn about the companies or ETFs you invest in.
Monitor Forex Rates:Â Exchange rates affect your investments, so stay informed.
Common Mistakes to Avoid
Skipping Research: Don’t invest in a company just because it’s popular.
Ignoring Forex Costs:Â Understand currency conversion charges.
Overlooking Taxes: Ensure you’re aware of applicable taxes.
Conclusion
Investing in the US stock market is a lucrative opportunity for Indian investors. By using platforms like INDMoney, you can enjoy a seamless, affordable, and secure investment experience. Whether you’re diversifying with ETFs or buying fractional shares of global giants, the potential for growth and global exposure makes this journey worthwhile. Start small, stay informed, and watch your investments grow in the world’s largest financial market.
FAQs
1. Is it safe to invest in US stocks using INDMoney?
Yes, INDMoney partners with licensed brokers(DriveWealth) to ensure security.
2. Can I invest small amounts?
Yes, you can buy fractional shares of expensive stocks.
3. Are there any extra fees?
There are no trading fees, but currency conversion charges apply.
4. How are taxes handled?
Your profits are taxed in India. INDMoney provides tax reports for filing.
5. Can I withdraw money to my Indian account?
Yes, you can transfer funds back to your Indian account anytime.
