Buying US stocks from India is one smart way to create wealth for the long term. The US Market offers benefits such as high market capitalization, the rising value of the dollar compared to the rupee, global diversity, etc.
But when it comes to investing your hard-earned money, it's essential to know all the important things about the investment. So before you invest in your favourite brands from across the globe, let us walk you through these 5 things that you should remember.
1. Who Handles The Regulatory Framework?
The US market dwarfs all other markets in the world with an unimaginably high market cap ($36,258,650.9 million). When there's so much money involved from not just the US but around the world, regulation is a must.
The Securities and Exchange Commission (SEC) is the main regulatory authority that looks over the US markets. The SEC was originally created by President Franklin D. Roosevelt in 1934.
They played an important role in bringing back the confidence investors had in the US markets with strict laws and regulations that ensured full disclosure and integrity. As a result, to this day, the US markets are considered to be fully transparent and investor-friendly.
2. What Is The Foreign Exchange Consideration?
When you're investing in the US markets, you juggle between two currencies: the USD ($) and the Rupee (₹). Initially, the rupee amount is converted into dollars right before you buy a stock option.
Subsequently, any profits or dividends that you earn in dollars are converted back to rupees. This generally means that currency fluctuations may impact your returns. But if you're investing through an app like Cube, you can transfer money to and from your US Brokerage account in one go to avoid this risk.
3. Will You Be Liable To Pay Taxes?
If you're investing in US stocks from India, you're in luck. There's an agreement in place between India and the US where the same income cannot be taxed twice. This is called the Double Tax Avoidance Agreement (DTAA).
Dividends are taxed @ 25% in the US. This is low as compared to other countries because of the DTAA agreement between the 2 countries. This tax can be used to offset the tax that you would otherwise have to pay in India.
In India, you still have to pay LTCG if the stocks are held for more than 2 years or STCG if the stocks are held for less than 2 years. The rate of interest is charged according to the income tax slab you fall under in the case of STCG and 20% + applicable fees and surcharges in the case of LTCG.
4. Are There Additional Charges?
You'll have to pay additional charges for:
5. Is There An Investment Limit?
The RBI allows you to invest in US stocks up to $250,000 (₹1,83,87,500) under the Liberalised Remittance Scheme (LRS). With apps such as Cube Wealth, you can invest as little as $1 in your favourite US brands.
*Note: All facts & figures are as of 23-10-2020.
1. Is it wise to invest in US stocks?
The US market hosts iconic companies like Apple, Amazon, Google, Microsoft, etc. Most leading US stocks have a stellar track record of generating consistent returns over the long run and healthy dividend payouts. Moreover, the value of the USD rarely loses strength.
All these are markers for a potentially lucrative investment but on the other hand, US stocks are high risk investments for Indian investors due to regulatory concerns, the value of INR, and more. Thus, you must evaluate your risk profile and speak to a Cube Wealth Coach to know if you should invest in US stocks.
2. Can Indians buy stock in the US?
Indian investors can buy popular stocks like Tesla, Google, Apple, Amazon, etc. from India with a reliable app like Cube Wealth. The RBI permits Indians to invest up to $250,000 in the US via the Liberalised Remittance Scheme. However, it is advisable to speak to a Cube Wealth Coach before investing in any US stock.
Watch this video to know how US stock advice works on the Cube Wealth app
Shriram is a Consultant at CubeWealth. He has developed cutting edge IT products for over 2 years before turning to his passion for the written word. His love for philosophy, developing products, and empowering people through quality content is what got him to CubeWealth.
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