Introduction
For Indian investors, the opportunity to own shares in world-famous companies like Apple, Amazon, or Tesla is now a practical reality. Thanks to technological advancements and regulatory frameworks, it’s now possible to invest in US stocks from India easily and securely. Whether your goal is diversification, exposure to innovation, or currency hedging, the US stock market offers a range of opportunities.
This step-by-step guide explains how you can get started, the rules you need to follow, and the strategies to make the most of your global investments.
1. Understand Why You’re Investing in US Stocks
Before you begin, clarify your reasons for entering the US market. Common goals include:
- Diversification – Reducing dependence on Indian market performance.
- Access to innovation – Owning shares of companies leading in technology, biotech, or renewable energy.
- Currency hedge – Protecting your wealth from rupee depreciation.
Clarifying your purpose will guide your investment approach and help define your risk tolerance.
2. Learn the Basics of the US Stock Market
The US market operates differently from Indian exchanges. Some key points:
- Major stock exchanges include NYSE (New York Stock Exchange) and Nasdaq.
- Trading hours typically run from 9:30 AM to 4:00 PM EST (equivalent to 7:00 PM to 1:30 AM IST).
- You can invest in individual stocks, ETFs, or mutual funds that track US indices like the S&P 500 or Nasdaq 100.
3. Choose Your Investment Route
3.1 Direct Investing via International Brokerage
Some brokers in India have tie-ups with US brokers, enabling you to buy shares directly listed in the US. This allows full control over stock selection and fractional investing.
3.2 Indirect Investing via Mutual Funds and ETFs
Many Indian mutual funds offer feeder funds that invest in US-based ETFs or index funds. This approach is simpler for beginners and involves fewer account setup requirements.
4. Open an Account with a Suitable Platform
To directly buy US shares, you’ll need:
- A brokerage account with an Indian platform that offers US market access or an international broker.
- KYC documents such as PAN, Aadhaar, and bank account details.
- An activated LRS (Liberalised Remittance Scheme) facility with your bank.
Platforms like Vested make the process easier and allow you to start with small amounts.
5. Fund Your Account Under LRS
The Reserve Bank of India allows individuals to remit up to USD 250,000 per financial year under the Liberalised Remittance Scheme for purposes including investment. You’ll need to:
- Fill out the required bank forms declaring that your remittance is for overseas investment.
- Pay applicable bank charges and currency conversion fees.
- Transfer funds to your US brokerage account.
6. Select the Right Stocks or Funds
When choosing investments:
- Research the company’s financials, sector outlook, and competitive position.
- For ETFs or index funds, review the fund’s expense ratio, holdings, and historical performance.
- Avoid investing in unfamiliar businesses simply because they are popular.
7. Place Your Order
Once your account is funded, you can:
- Buy market orders – Purchase at the current market price.
- Set limit orders – Buy only if the price drops to your target level.
- Consider fractional shares if you want to invest in high-priced stocks without committing large sums upfront.
8. Understand Tax Implications
When you invest in US stocks from India, taxation works as follows:
- Capital gains – Taxed in India based on the holding period (short-term or long-term).
- Dividends – Generally subject to a 25% withholding tax in the US, with potential relief available under the Double Taxation Avoidance Agreement (DTAA).
You can learn more about tax on US stocks in India to ensure compliance and better tax planning.
9. Monitor and Rebalance Your Portfolio
Keep track of your investments regularly:
- Monitor earnings reports and market news affecting your stocks.
- Review sector allocations to avoid over-concentration.
- Rebalance your portfolio annually or when your allocations shift significantly from your target.
10. Keep an Eye on Currency Movements
Since your investments are in USD, fluctuations in the INR-USD exchange rate will affect returns. While currency movements cannot be controlled, staying aware of them helps set realistic expectations.
Example Scenario – First-Time Investor in US Stocks
Imagine you start with USD 500 (~₹42,000) in a US brokerage account. You invest in two ETFs – one tracking the S&P 500 and another tracking global technology companies. Over a year, the S&P 500 grows by 8%, and the tech ETF grows by 12%. Additionally, the rupee weakens by 3% against the dollar. Your overall returns in INR terms would be higher than the market performance alone, supported by currency gains.
Final Thoughts
Investing in US markets from India has become increasingly accessible in recent years. With the right approach, you can diversify, access innovation, and protect your wealth from local economic risks. However, success comes from careful planning, understanding taxation, and maintaining a long-term perspective.
Start small, learn as you go, and use reliable platforms to manage your investments effectively.
