How to Invest in Global Share Markets Like U.S. & Europe from India?

There has been a recent uptick in the number of Indians who invest in international stock markets. In addition to its benefits, this also offers quick and easy returns. However, there are costs involved, such as huge broker fees. It’s vital to remember that the RBI has set a limit of INR 20 lakhs (approx), which applies to all Indian residents. These terms are for all the funders who want to put money into U.S. shares.

Positive of Global Investment 

Many funders buy international global stocks because of the rising trade rates. It allows them to reap huge profits. In addition, many individuals can have variety in their portfolios by funding different global stocks. Furthermore, the U.S. stock market is home to some of the most well-known firms, like Tesla, Google, Amazon, Facebook, General Motors, Apple, and Microsoft whose stocks perform well.

Ways to make Global Investment

Global investment from India may appear difficult at first. However, there are only two major ways to go about it.

Investing In Your Own

There are two methods under direct global investment. Both of the following methods are used for funding foreign equities:

Open a foreign trading account. 

Before entering international stock markets, open a foreign trading account with an Indian broker or a global trading partner.

If you want to invest in stocks from abroad, open a Demat account. It will be best for you because so many funding firms support it.

Sign up with a broker in another country.

The Indian market for U.S. shares is accessible through some well-known foreign brokers. They can assist you well in your funding abroad. But, again for this, you need to have a separate account.

Subsidiary Investment

There are three ways to make an indirect global investment: 

• ETFs, or exchange-traded funds

Direct access to U.S. ETFs is possible via an Indian or a foreign broker. In contrast to other fundings, ETFs do not require you to keep a set amount in the account.

• Mutual Funds 

Investors can also opt for mutual funds for global investment. It is one of the easiest methods of investing in foreign equities. There is no need for a minimum balance for trading accounts. Mutual fund trading can also relieve the stress of selecting individual stocks.

• Advanced mobile software

New money apps provide another entry point for funding in international stock markets. Funding via apps makes it very easy to invest in stocks. You don’t have to go anywhere; sit at your home, and you can start trading.

Factors urging Indians to Choose Global Stock Market 

Grab better chances

Once you enter the foreign stock market, there is more and more for you to explore. Also, it provides better chances in terms of stock trading. Global investment gives you an opportunity to earn from profitable shares. 

Portfolio Diversity

Let’s assume that you have invested in both Indian as well as foreign stock markets. Indian stock crashes due to some reason. But your funding in foreign shares will give you quite a good result. The reason being it’s not affected by Indian markets.

Investing in Favourite firms

Everyone looks up to brands like Tesla, Meta, Apple Inc, and many others. What if they get a chance to invest in these firms? All of these are foreign-based companies and have provided good returns, so far. Therefore, it attracts many Indians to buy stocks in these companies.

Precautions Before Global Investment 

While conducting an in-depth examination of the investee firm is essential, a prudent investor will also consider the following factors before purchasing foreign shares.

Risk Factors of a Country

Any foreign investment requires careful consideration of the potential dangers unique to that country. Before investing consider investee entity-specific, future business prospects, geopolitical concerns, macroeconomic considerations, etc.

Risk Factor of Foreign Exchange 

Foreign exchange risk is another factor that can’t be overlooked. An investor should always have a margin in the ERR. This can be due to dynamic foreign currency. The investor might lose or make more money, that depends on the stock exchange rate. Hence, they should factor in that risk before funding.

For instance, if you invest in the USD with the expectation that it will go up against the INR, your return will be higher in INR terms, and vice versa.

Risk of Volatility

The danger of price changes in stock is always there. Increased volatility means increased risk. This is due to high uncertainty in the stock’s price. Therefore, from a funding point of view, more stable and mature markets are preferable.

Risk of Economy 

Many economic variables can affect the share price of a company. So, before buying any stock overseas, it’s important to consider the country’s overall financial health.

Investment Expenses in Foreign Stocks

Fees incurred during a funding

It’s important to keep in mind that investing in foreign companies entails a huge funding cost. It is way higher than buying Indian stocks. There is a hidden cost between a currency’s buy and sell prices (say, the U.S. dollar).

If you want to save time and money, opening a bank account in the same currency as your funding is a smart move.

Other factors are:

• Minimum funds needed for margin trading in a broker account
• Finances fees
• Financial institution fees
• Costs, including any applicable sales, use, or value-added taxes.
• Depending on the portfolio size, transaction fees might be as little as 0.5% and as high as 2%.

Source-of-Income Tax-Collection Considerations (TCS)

If an Indian investor invests in foreign stocks and their yearly funding exceeds the prescribed threshold limit, then the authorized dealer bank must levy and collect tax collected at source (TCS) at the rate of 5%. This is per Section 206C (1G) of the Income Tax Act, 1961 (“I.T. Act”).

Conclusion

While funding in U.S. stocks can be good, it is necessary to grab the whole point. There can be risk factors, too. To begin your global investment, you can choose ways that best suit you. While direct funding requires you to maintain a minimum balance, indirect funding does not. Based on your needs, always choose the right way or take the help of an expert. For further details, visit the Piramal Finance website to get assured assistance.