Biggest difference between Indian and US stock markets is about making stock-buying affordable | The Financial Express

Biggest difference between Indian and US stock markets is about making stock-buying affordable

If you have a limited budget and want to diversify across US stocks, Fractional Investing may be put to used to hedge the portfolio with international diversification.

Biggest difference between Indian and US stock markets is about making stock-buying affordable
This process of buying stocks in Fractions is not yet allowed in the Indian stock market.

Buying Berkshire Hathaway (BRK.A) stock from India requires a huge amount of money. Yes, you need almost Rs 3.20 crore to buy 1 share of Warren Buffett’s company. Similarly, to own one Apple share, you need to shell out over Rs 12000! But, buying US stocks is still affordable compared to buying shares in Indian stock exchanges.

Before buying US stocks from India, you need to convert Indian Rupees into US dollars to complete the transaction. This is why investing in US stocks may not be affordable to all investors in India.

However, there is a way out – you can own a portion of your favourite US stocks. Owning fractions of stocks is possible through Fractional Ownership which is allowed by the U.S. Securities and Exchange Commission. This process of buying stocks in Fractions is not yet allowed in the Indian stock market. MRF, Page Industries, Honeywell Automation, 3M India, Shree Cements are some Indian companies whose one share is available at a price between Rs 20000 and Rs 85000.

By buying stocks through Fractional Ownership, you will also end up taking advantage of Dollar cost averaging (DCA). DCA is a technique of investing a fixed amount at regular intervals to ensure that you buy more shares (or a larger fraction of a share) when prices are low than when they are high. By investing a fixed dollar amount rather than buying a fixed number of shares, you get the advantage of DCA made effective through Fractional Ownership.

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Fractional Ownership allows you to buy a portion of a stock you might not otherwise be able to afford. So, you can buy a portion of Tesla stock with Rs 5000 each month or buy stocks of Amazon, Microsoft, Apple, and a few others in fractions with Rs 50000 each month. In this way, you can start building a portfolio of US stocks for the long term within your budget.

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If you have a limited budget and want to diversify across US stocks, Fractional Investing may be put to used to hedge the portfolio with international diversification. You can invest 1,000 dollars and buy Fractional Shares of top US companies to create an overseas stock portfolio.

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