From individual stocks such as Apple, Tesla to different ETFs and IPOs, Indian investors can build a global portfolio with the aim of diversification.
There are opportunities galore for investors looking to invest in the US stock market. The good news is that even Indian investors are allowed to invest in US stocks as per the RBI guidelines. There are several money-making investment options available in the US stock market for Indian investors. One just needs to open an international brokerage account and get going after completing the registration and other formalities. The entire process may get completed within a week and the actual buying of US stocks may begin once the foreign trading account is in place.
Once you have the US stock trading account opened, there are various investment options available for Indian investors. From individual stocks such as Apple, Amazon, Tesla to different ETFs to IPOs, Indian investors can build a global portfolio with the aim of diversification.
Buy US stocks from India
The FAANG stocks representing Facebook, Apple, Amazon, Netflix and Google remain the global investors’ favourites. Other than the large-cap stocks, there are mid and small-cap stocks that can be added to your portfolio. You can also explore other top US stocks that are a part of the S&P 500, Nasdaq 100, Dow 30 indices or the Russell 2000 Index. From technology to pharmaceutical companies and from large-cap to small-cap stocks, the US stock market has a wide spectrum of top global firms.
If owning any US stock owing to its high price is a concern, here’s another good news for you. You can own Fractional Shares in the US stock market. For example, owning one share of Amazon ($3000) could cost you around Rs 2 lakh. However, you may own a portion by investing even a small sum of Rs 5,000 or even lower. Over time, you can accumulate more or build a portfolio of US stocks with limited funds.
Own US stocks via ETFs
For starters, the ETFs listed on the US stock exchanges can be a good starting point. ETFs are low-cost investments and allow one to take exposure in several stocks of the same index at one time. You just have to open a brokerage account registered in the US from the comfort of your home or office in India. And once invested, you can also employ traditional stock trading techniques such as stop orders, limit orders, margin purchases, and short sales using ETFs.
The SPDR S&P 500 ETF, also known as SPY ETF, is one such ETF that tracks the S&P 500 index – an index of a diversified group of large-cap US companies across eleven major industries. The top three sectors in the S&P 500 are Information Technology, Health Care and Communication Services, totalling about 50 per cent of the index. The three prime stocks of the S&P 500 index are Microsoft, Apple and Amazon by index weightage while Facebook, Berkshire Hathaway, Visa are some other constituents.
The Invesco QQQ Trust (QQQ) is another ETF that gives you access to Nasdaq’s 100 companies in a single investment. By investing in Invesco QQQ ETF, you are investing in some of today’s most innovative companies, all in one place. Some of the top-performing US stocks such as Facebook (FB), Amazon (AMZN), Apple (AAPL), Netflix (NFLX) and Google (GOOGL), collectively known as FAANG stocks, are a part of the Nasdaq 100 index and can be owned through Invesco QQQ ETF.
Buying IPO stocks
As an Indian investor, it’s also possible to make some serious money from the booming US IPO market. If you are looking to invest in the US IPO stocks from India, you just need to open a trading account with an international investing platform and start investing in the new listings when trading begins in them. Initial public offerings (IPOs) of DoorDash and Airbnb with their multibillion-dollar offerings were a big success for many investors in the recent past.
Buying US stocks from India should be to diversify your domestic portfolio. There are global companies listed on the US stock exchanges, thus giving you global exposure to investing. Any dip in the share prices of established companies may be used as an opportunity to accumulate them for the long term. Build a core portfolio of some of the top US stocks and reap the benefit out of the world’s largest economy over the long term.