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Things to consider when investing in the US markets

Updated: Mar 17, 2022

Global investing has become a powerful tool for portfolio diversification, stable returns, and better ROI. But an Indian investor is wary of factors like tax implications, currency exchange policies, and more. To guide you to make an informed investment decision while investing in the US Stock market, here we talk about how global investing is advantageous and must-know commandments.

 

A decade back, in 2011, Tesla Motors, Inc. (TSLA) sold its shares at an opening price of $4.92 per share. Today its share price has skyrocketed to $1089 per share. Imagine if you'd invested $1,000 in its shares back in 2011, then what would your investment be worth today?


That is the power of global investing; the returns, especially in the US markets, can be jaw-dropping.


Global investment is a strategy of selecting international investment instruments as part of your portfolio. Its benefits include:

  • Superior ROI

  • Global exposure

  • Diversification of investment portfolio

  • De-risking your investments

  • Getting away from the volatile Indian market and a shifting economy

  • Investing in globally competitive, high-performing US stocks


How to invest in US markets?


With technological advancement and access to information, global investing has become a powerful tool for portfolio diversification and better returns. Indian residents can consider cross-border investing through multiple channels.

There are two broad ways of investing in the US stock market for Indian residents:

  • Direct investment in stocks

  • Indirect investment in stocks via mutual funds or ETFs

However, like any other investment product, it would be prudent if the investors acquaint themselves with the required know-how of the US economy functions.


Things to consider when investing in the US markets


Investing in the US markets has now been simplified and easily accessible, but you should understand some critical factors to understand the risk and opportunities on the returns.


1. The Liberalized Remittance Scheme


An Indian investor can enter the US stock market under the RBI’s Liberalized Remittance Scheme or LRS. According to this scheme, to invest, you can remit up to USD 250,000 per year. This limit is per person, which includes minors. If you are a 4-member family, you can remit up to USD 1 million annually. Any amount beyond the limit of $250000 would require RBI’s permission.