Why Indians Should Invest in US Stocks and Why?
Globally, many of the top wealth-creating companies are based in the US. During the years of their existence, these companies have made excellent hubs of investment. As such, there are not many links between the US and Indian equity markets. This is why investment in US firms is attractive for investors. This is true, especially for Indian citizens.
At present, the US controls many of the stock markets globally. Among the largest stock exchanges in the world is the US stock market. They also include the NY stock exchange and NASDAQ.
Advantages Of A Developing US Economy
Today, many leading blue-chip companies are listed on stock exchanges in the US. This has given access to investors worldwide to benefit from their profits. Interestingly, blue-chip companies of Indian origin are also listed on these exchanges. But, due to their smaller scale of business, they are not so attractive. Here are some reasons why Indians can benefit from investments in the US markets.
Better capitalization
Better capitalisation is the leading benefit of this prospect. Companies in the US are rich in their corpus. Notably, the NASDAQ and NY stock exchanges are the largest markets. Incidentally, the US stock indexes have a huge impact on the global markets. The free market forces also favour the markets in the US. This is a valid reason for any investor to put their money in the markets here.
Profits due to the US Dollar’s appreciation
In recent years, the Indian Rupee has weakened. Compared to the US dollar, the Rupee has shown only depreciation. It is predicted that this trend will continue. Due to this, any earnings from equity outside India are suffering. This happens due to the rupee-to-dollar exchange rates. But the depreciation of the Indian Rupee helps to enhance profitability. It will happen if the US equity gains. It will impact the assets governed in dollars. So, it is not a question of the global markets falling or remaining steady. If there is a decline in the Indian Rupee against the dollar, you will benefit. So, investing in US markets will preserve your wealth even if the Rupee falls.
Portfolio diversification
The US is a popular investment destination. Most companies worldwide have a presence on the US stock markets. So if you invest in these companies, you will be able to diversify your financial portfolio. You will also gain international exposure. But Indian companies mostly dominate the Indian indices. If any event occurs in the country, it will have an impact on each of those companies. In contrast, the markets in the US are very varied. Even during tough times, companies tend to show strength. Indian indices and companies are in stark contrast.
Exposure to innovation
India lacks the presence of influential firms. This is even though it is a fast-developing economy. Thus, it is hard to find opportunities to create wealth through investment in firms. In contrast, the US stock markets are marked by the presence of some of the leading companies. These include some of the best names in technology and consumer products. Investors can find many investment opportunities in the US. There is ample scope to invest in emerging industries. Some of them are biomedical, artificial learning, robotics and more.
How to invest in the US Stock Market from India?
There are two routes to investing in the US markets. You can do this from India.
Direct Investment
- Investment Apps
In recent years, there has been a heavy influx of apps in this segment. Now, many start-ups have introduced mobile apps. They allow Indian investors to put their money in US firms. But these apps follow the applicable regulatory limits. Due to this, you may not be able to perform intraday trading. So, you can buy stocks in the US from India for the long term.
You can benefit by using fractional investing. So, you do not need bulk money to buy shares of prominent companies like Amazon, Apple, Netflix and more. For as low as $1, you can buy a fractional unit of the shares of these companies. These apps have made it possible to invest in many of these dream firms.
- US-related brokerage accounts
You can open a trading account with a broker abroad or in India. Using this Demat account, you will be able to invest in equities in the US. Usually, this will be done via direct investing or LRS. As such, you do not require a US address or citizenship to open such an account. These days, many local brokers are collaborating with brokers in the US. They act as a link and help you perform the trading transaction. So, you will be opening an international trading account. It could be with any of the foreign brokers. All you need are a few documents. After furnishing them, you will be ready to operate the account. It is also possible to establish an offshore trading account. But be wary of the applicable fees for such accounts.
- ETF
ETFs are expanded as Exchange Traded Funds. They give you instant access to multiple stocks in the US. An ETF allows you access to focused industries in the US markets. They track specific sectors and not individual firms. The expense ratio of an ETF is lower than mutual funds.
- Stacks
Stacks are ETF baskets. You can invest using them in just one click. Stacks are created by financial experts and professionals. They do so after rigorous studies. Also, these ensure a regular rebalancing of the stack. It is done following the state of the markets.
- US-Focused-Indian Mutual Funds
It is possible to invest in Indian mutual funds. Many of them consist of US stocks. There are many benefits of mutual funds. They give you several benefits like the diversity of portfolio. Moreover, you can get a geographical advantage this way as well. At the same time, they carry their risks and rewards. Overall, a fund such as this could be impacted by national events. At the same time, exchange sectors can also impact such funds. These funds also carry their fees and expenses.
These are several reasons Indians should also invest in the US stock market. You can learn more about such stocks and other financial concepts visit the Piramal Finance website. It is the premier destination for all financial knowledge and information about such funds. You can benefit immensely by spending your time on their website.