What is Global/international investing?
The globe is turning into a global village with the emergence of the digital economy, therefore investing shouldn’t be limited to just one nation. Investing has thankfully become more worldwide. These days, it’s not a huge problem to invest in the world economies while sitting in India. An investor can obtain securities and financial assets in various nations of the world through global or international investment. It could be used for a variety of things, including portfolio diversification, more stability, higher returns, etc. Are you wondering how to invest in international stock markets from India? Read on to find all the information you need to find the best broker for US stocks in India.
Things to know before investing in international stock markets from India
- Transaction Costs: It is important to remember that investing in international companies typically entails higher transaction costs than investing in Indian stocks. The distinction between the foreign currency’s buying and selling rates is one undetected transaction expense (say U.S. dollar). Other crucial components include
- Brokerage: These costs are charged while purchasing or selling shares. It is either a flat rate or nominal percent per share, or a combination of both.
- Margin money requirements: Margin money is the amount borrowed from the broker to either invest in or trade shares. The Shares form the collateral for the loan.
- Bank charges: When you remit US account you will incur commission charges for foreign remittance and GST on the commission. Also, the bank also makes money on the foreign exchange conversion spread. The total cost may come to 4% to 5% of the amount remitted.
- Depository charges: These charges are levied on investors for providing custodial services for the shares. They may range from $0.01 to $0.03.
- Applicable goods and service taxes/STT, if any: Investors also need to pay government taxes on brokerage fees, depository charges, etc.
On average and assuming a reasonable portfolio, the transaction cost can be indicatively in the range of 0.5% to 2%.
- Taxes – TCS and Capital Gains: Gains made abroad can be subject to taxation there. In that nation, you might need to file tax returns. You can also be liable for taxes in India since you are an Indian tax resident. Although you may be able to claim tax credits, you must first familiarize yourself with a whole new set of taxes. In the same vein, you must make sure that your fund or brokerage can give you the necessary paperwork and gains calculations so you can file your taxes.
- Expertise: Indians might think they are more knowledgeable about their own domestic market. However, there may be subtleties in other nations’ political situations, evolving legal frameworks, transparency standards, and macroeconomic policies that we are unable to fully comprehend. Before looking to accept asset or security risk exposures, it is crucial to either teach yourself or engage through an expert/index fund for basic exposure.
- Risk Appetite: International equities come with their own distinct hazards that investors should take into account, in addition to varied trading regulations and protocol. Your foreign allocation should be between 5-25% of your entire stock market investments, depending on your return goals and risk tolerance. Over time, as global trends become quite entrenched, the international weighting required for true global exposures is likely to increase.
- Currency fluctuation: Even though currency fluctuations can favor the U.S. dollar, they are always a risk and traders should be ready for both positive and negative results.
- Political instability: Purchasing international equities entails making an investment in the nations and citizens of the respective regions. A foreign company’s home country’s political or economic developments could hurt your investment.
- Regulatory charges: For participating nations and organizations, international stock exchanges follow their own set of laws and regulations. Changes in financial and governing practices may result in restrictions on foreign investors’ access rights.
- Taxation: Taxes on foreign investments are frequently subject to higher rates of taxation than those on domestic holdings. Some foreign countries may also place additional taxes on international investors, similar to regulatory changes.
- Finding out the best broker to invest in US stocks from India: If you are looking for the best broker to invest in US stocks from India, here is a list of the top five:
|An extensive selection of financial instruments including stocks, EFTs, and stacks||Limited analyst updates|
|Telephone, email, and live chat customer support||No access cryptocurrencies|
|Extensive tools and research options. Tipranks features offered by Stockal.||High cost brokerage commissions|
|A varied range of excellent research tools||Complicated procedure for opening an account|
|Low trading fee||Complex trading platform|
|A wide variety of products||Inefficient customer service/staff|
|Vast product portfolio||High options, bond, and futures fees|
|Excellent trading platform||High account minimum deposit|
|Excellent research||Lacks 24×7 availability and live-chat|
|Low commission-free real stocks, and forex CFD fees||High CFD fees for stock indexes|
|Good account opening experience||Only spread betting, real stock, and CFD available for UK clients|
|Great email and chat support||Smaller account currencies are unavailable|
|Excellent educational material||Limited product|
|Low trading fee||Limited withdrawal and deposit options|
|Great research tools||No demo accounts|
|Low forex fee||High CFD fee for stocks|
|Great mobile and web platforms||Only CFD is available|
|Advanced educational and research tools||Customer support is available only 5 days a week|
As you might understand from the details in the tables above, the best broker to invest in US stocks from India must have certain characteristics. It is advisable to look at the factors listed below:
- Fees: A given stock trade’s trading costs for one online broker maybe 50 times greater than those at another. All of the brokers on this list charge minimal fees.
- Interface and User friendliness (Mobile trading platform): The mobile trading platform should ideally be user-friendly and include efficient chatbots, a modern and updated design, price alerts, and two-step logins. A well-organized interface makes it easier to use the platform.
- Range of investment products: The term “investment product” refers to all the stocks, options, bonds, derivatives, EFTs, and other financial products that investors invest money in with the aim of making a profit. The best broker to invest in US stocks from India would have a varied range of investment products.
- Research: Technical analysis methods can aid traders in arriving at rational judgments. Technical analysis can provide buy and sell indicators, which can help with identifying new trading opportunities. Analysts use a range of indicators and toolsets for stock market analysis. The best broker for US stocks in India should be able to utilize these tools, which mostly consist of market indicators, to predict price changes for all important financial indices. The basis for trend analysis and determining buy and sell signals is the movement of various oscillators and indicators.
- Customer support: The best broker for US stocks in India should be able to form efficient customer support, which is active 24×7. Customers are more likely to recall their direct connection with a firm, regardless of how amazing the service is or how skilled a company’s team is.
How to invest in international stock markets from India
- Direct Investment
By opening a foreign trading account with an Indian broker who is affiliated with a foreign broker, or alternatively a foreign broker, an investor can invest directly in international equities. However, some overseas brokers could impose a minimum deposit requirement on investors, increasing their financial needs. You can try using applications that provide access to international equities for simple investments.
Due to your direct access, you are able to invest directly in equities, as well as active funds, and ETFs in various markets which you believe have promise for the future. Should be aware that under the RBI’s Liberalized Remittance Scheme, the maximum amount of money you can transfer abroad each year is $250,000 (LRS).
- Via Investment Apps: Many fintech businesses such as Stockal have released smartphone applications that make investing easier and help Indian investors buy stocks on overseas exchanges. They offer a simple user interface, simple financial transfers, and support for fractional investing.
- Via International brokerage accounts (Via Indian Broker or Foreign Brokers):
- You should open a Demat and trading account with an Indian stockbroker who offers access to such funds if you intend to invest via an Indian mutual fund that trades in US stocks. Regular KYC and other fundamental procedures will be followed, after which you can begin investing. However, you should consider the brokerage fees as well as the expense ratio of this type of mutual fund because they would ultimately reduce the investor’s returns.
- Alternatively, you could register a broker account and direct investments in US stocks. The KYC standards and other fundamental procedural criteria will remain the same as before.
- Indirect Investment
You can even invest indirectly in the United States market from India through mutual funds. There are numerous funds available that cover various industries and asset types. High sales charges and expense ratios, management abuses, poor trade execution, and tax inefficiencies are a few drawbacks of this type of investment.
- Stacks: Hedge funds, international asset management businesses, seasoned wealth management firms, and portfolio managers create stacks on Stockal. You don’t need to conduct an in-depth study; you can diversify the holdings with only one click. Investing professionals built the platform based on in-depth study & financial analysis. In order to maintain alignment with objectives and benchmarks, it also includes an active rebalancing component. Some of the stacks on Stockal include Omniscience Supreme US, Electric Vehicle Portfolio, and US Tech Bluechip Portfolio.
- ETF: A basket of assets known as an exchange-traded fund is exchanged on the market just like a stock. Unlike mutual funds, ETF share prices fluctuate throughout the day as the ETF is purchased and sold. Stocks, commodities, bonds, and other investment kinds can all be found in ETFs; some exclusively provide assets from the United States, while others are global. Instead of purchasing the equities separately, ETFs have lower broker commissions and expense ratios. Some of the popularly traded stocks and EFTs on Stockal include Apple, Inc., Tesla, Inc., and Amazon.com Inc.
- Internationally focussed Mutual Funds: Equity funds which purchase shares of listed companies outside of India are known as international funds. You can make an investment in some of the largest corporations in the world with the aid of these funds. The fund manager now invests your funds in overseas stocks in two different methods.
- By directly investing in stocks and constructing a portfolio
- Alternatively, you might invest in a global fund with a pre-built portfolio of equities from international corporations.
Regardless of the route they take, they are managed by Indian mutual funds firms. Like all other mutual funds, they are governed by the Securities Exchange Board of India.
The Bottom Line
If you are wondering how to invest in international stock markets from India, start your international investing journey via Stockal’s varied offerings. Stockal has no account minimums and a simple account opening process. You can also purchase fractional shares and receive top-notch analysis and research on a secure website. Additionally, Stockal will provide you updates on your assets without delay. Read more on how to invest in US stock markets from India.