On the way from an economy that is developing to one that is developed, countries experience several cycles of expansion and contraction. Therefore, having the ability to invest in developing economies abroad is crucial. An example can be Japan in the 1970s, India being in the sweet spot right now, and the USA in the tech boom recently. The US stock market did nothing, while the Japanese stock market tripled in value throughout the 1970s, despite a 10x increase in oil prices. This was fueled by Japan’s rising productivity as well as technological advancement.
The critical fact is that at any given time, at least one economy is performing well, and having diversified holdings across global markets pays out. Read on to find out how to invest in foreign stocks from India and why it is a great choice must consider it now.
Reasons to consider investing in foreign stocks
The largest financial market in the world is located in the United States. It is a forward-looking gauge of news and growth expectations in the global economy. It makes sense that it is the #1 investment destination for international investors. Without having a piece of the US stock market, your portfolio is exposed to concentration risk, and you miss out on opportunities presented by foreign investors.
Diversification: You geographically diversify your investments when you make investments outside of the Indian market. To lower your risk, it is essential to diversify your holdings. You may invest in various industries and asset classes, and you now have the choice to do so abroad!
Gains from rupee depreciation: With few swings, the US dollar remains one of the dominant currencies in the world. Your investments in US dollars can assist you in building long-term wealth. Another reason to consider making an investment in Google or to be investing in Amazon from India is the increasing value of the dollar and falling value of the rupee. Over the long term, investment in the US stock markets offers significant and consistent returns.
Investment in top companies of the globe: By investing in foreign stocks, one can examine the potential for growth in some global economies, particularly in developing nations.
Investment in upcoming themes: The practice of investing in companies with a certain theme has grown significantly, and it can be profitable if you’re an investor aiming to maximize returns. For instance, investing in stocks of businesses focusing on artificial intelligence and machine learning would be a possible strategy.
How to invest in foreign stocks from India directly?
Read on to find out how to invest in foreign stocks from India:
Direct Beneficial Ownership
Several domestic Indian stockbrokers and US stockbrokers have partnerships. These brokers would act as intermediaries while you carried out your trades. If you’re unsure how to invest in foreign stocks from India, one choice is to open an account with Stockal.
A Stockal account can be easily created within a matter of minutes. It provides an easy-to-use interface and streamlines money transfers while additionally offering fractional investing. Make sure to select an investment app that offers zero brokerage, zero maintenance costs, and the possibility of a free account setup for your own convenience and benefit.
However, remember that such a strategy has a certain set of restrictions, so proceed with caution. Depending on the stockbroker you select, there can be limitations on the kinds of alternative investments you could use, the number of trades that you will be allowed to conduct, or both. The investment costs may differ due to brokerage fees (if any) and currency conversions involved. Therefore, ensure you are fully aware of any expenses related to the process before registering your account.
Via Investment Apps
While you are reading up on how to invest in foreign stocks from India, note that investment apps have a user-friendly interface that makes it simple to transfer money across accounts and support fractional investing. Numerous start-ups have created applications like Stockal to enable Indian investors to participate in the US stock market since the development of mobile apps for various services.
Since fractional investment is now an option, you don’t need a sizable chunk of money to invest in significant stocks, including Apple, Facebook (META), Amazon, Google, and Netflix. You can buy a portion of a share for as little as $1. It’s no longer a utopian dream to invest in the most valuable companies in the world.
Via brokerage accounts
You should first undertake a trade with an Indian or foreign broker in order to transact in US equities through direct investing and LRS. To undertake a trade with a United States brokerage company and trade in the United States stock exchange, you do not require a US address or to be a citizen of the US.
With US stockbrokers, many local brokers work together. They carry out your transactions and act as mediators. Any of these companies will let you open a global trading account. You only need to supply a few documents to open this account, and you’re all set. Additionally, you can use a platform like Stockal to open an offshore trading account. Ensure that you are aware of the costs and charges before registering an account.
Another option that you may opt for now is the National Stock Exchange’s only wholly owned subsidiary – the NSE IFSC. This NSE subsidiary operates international stock exchanges at GIFT City, Gandhinagar, so NRIs and overseas investors can effortlessly trade Indian stocks. For Indian individual investors, the NSE IFSC is now a viable option.
Indirect (Index-based) / Thematic Ownership
Direct stock investment calls for a certain level of skill in stock picking and position sizing. Exchange-traded funds, which give you immediate access to a huge selection of US companies, are another option. Investing in an ETF that tracks specific industries, such as healthcare or energy, rather than specific companies can also gain exposure to those sectors.
Indians are increasingly becoming more interested in theme-based ETFs, which instead of investing in particular sectors, concentrate on expanding issues like power, e-mobility, transportation, cloud services, or even global ETFs that offer diversified portfolio exposure to the United States. Since ETFs are passively managed, they have lower expense ratios than actively managed mutual funds. Stockal’s Global X NASDAQ 100 Covered Call ETF is an example.
You can invest in these stock and ETF baskets with just one click. Stockal’s stock baskets were created in cooperation with portfolio managers, seasoned wealth management companies, global asset management companies, and hedge funds. Without undertaking any additional study, you can diversify your existing holdings with just one click. Investment experts develop stacks through in-depth research and financial evaluation, and these are regularly rebalanced to guarantee alignment with objectives and benchmarks.
For instance, the US Tech Bluechip Stack invests in internet-only companies that offer cutting-edge competitive advantages (MOATs).
Why US markets may be the prime destination to invest in?
The products and services offered by Apple, Google and Amazon, are the most popular worldwide. Needless to say, these companies have been doing quite well. Then, wouldn’t it make sense to own those shares and prosper with them? If you are an Indian trader reading up on how to buy Apple shares in India, this notion has undoubtedly entered your mind. If so, feel free! By taking part in the United States stock market, the main entry point for international investments, you can acquire their shares or that of any multinational corporation.
The US stock market has all of the necessary components in place, including a 20 trillion dollar economy, international companies from China, Japan, and other developed nations that are ranked on their stock exchanges, a high volume of trades, a huge market capitalization of stocks (which provides liquidity), open but stringent financial market regulations, and, most importantly, affordable investing options. The good news is that, regardless of their presence or listing in India, you can truly invest in and own shares of all the major international corporations.
This statistic is for you if one of the numerous factors you need to be taking into account before making an investment in Google or investing in Amazon is market capitalization. The US stock market represents some of the top international companies with the largest market caps. Over the previous ten years, US-based businesses have raised their share of the worldwide market to around 70%. According to a PWC study titled “Global Top 100 Companies by Market Capitalization 2022,” 63 of the top 100 global firms have their headquarters in the US.
You can consider owning shares of the FAANG (or MAANG, as it has got recently been re-termed as) stocks—Facebook (META), Amazon, Apple, Netflix, and Google—and other significant US corporations like Microsoft. Additionally, non-American global blue-chip businesses like Chinese giants Tencent Music, Alibaba, Baidu, and many others are listed on US stock exchanges. It’s time to capitalize on these businesses’ massive consumer-driven demand to thrive. If you want to figure out how to buy an Apple or other MAANG shares in India Stockal is the answer.
How to start investing in foreign stocks like Apple or Google directly?
You might have heard several investment gurus advise you to buy stocks in businesses you trust and are familiar with. However, it is better to seek the advice of a qualified advisor who can guide us on which stocks to purchase and how. Of course, there are those businesses that we all know and trust, like Facebook (META), Apple, Amazon, Google, and Starbucks. To protect against the rupee, consumers purchase US company equities for one of the most common reasons.
In addition to any potential exponential development in the company itself, investing in US stocks will benefit you by way of the value of the dollar. Additionally, it guarantees that your portfolio is geographically diversified. Consumers use these multinational products or services on a daily basis, which is another more sentimental justification for investing in foreign stocks.
This provides you with the assurance to wager on their expansion. Via the RBI-authorized LRS route, which the Indian Government has sanctioned, you can invest in foreign stocks from India. You can invest a maximum amount of $250,000 per year in the US as per the LRS scheme.
The Bottom Line
Being able to benefit from diversity simultaneously and ride the identical economic upcycle of certain other nations always pays well. Your best option if you want to invest in the global stock market is Stockal. There are no minimum account requirements, and the platform boasts of a quick account opening process. Being a secure platform, you can buy fractional shares and get excellent analysis and research. Furthermore, Stockal will promptly give you details on all your holdings. When you are planning on investing in foreign stocks from India, choosing Stockal would make the procedure easier and more compliant for you.