To start investing money in the US stock market, you can consider looking at stocks listed on three major US stock market indices.
How to Invest in US Stocks: Money making opportunities in the stock market come once in a while. Today, when the US markets are down from the all-time high levels reached in November 2021, it gives an opportunity for long-term investors to diversify their stock portfolio in the world’s largest economy.
Currently, the US economy and the global markets may be facing headwinds in terms of rising inflation, yield and lower liquidity. However, for long-term investors these factors may not matter much over a longer time horizon.
To start investing money in the US stock market, you can consider looking at stocks listed on the three major US stock market indices – Nasdaq 100, S&P 500 and Dow 30. Some of the mega-cap and blue-chip US stocks are Apple, Google, Tesla, and Microsoft, amongst several others.
You need to open a trading account with any international brokerage house such as Stockal, Vested Finance, INDmoney, DollarBull, Winvesta amongst others.
In addition, both NSE and BSE, the two leading stock exchanges in India, have an international trading platform for the Indian investors.
NSE International Exchange (NSE IFSC), a wholly owned subsidiary of the National Stock Exchange of India (NSE), facilitates buying US stocks through the NSE IFSC platform.
The India International Exchange (IFSC) Limited (India INX), BSE’s international arm, allows buying international stocks including shares from major US-listed companies via its wholly owned subsidiary India INX Global Access IFSC Limited.
The entire process of opening a foregin broking account with an international brokerage house is simple and easy. In addition to the KYC formalities, one has to fill a form related to LRS of RBIs foreign exchange rules. The process of buying stocks in the US stock market is seamless with all the paper-work being handled by the foreign brokerage firms. After your international trading account is approved, you are allowed to add funds to your brokerage account and start buying stocks online.
The unique part of investing in US stocks is that you can buy the highly prized US stocks denominated in dollars even in Fractions in Indian Rupees. This is because Fractional Investing is allowed in US stocks. In a way, you can keep buying top 10 US stocks each month in fractions with an amount as low as Rs 10,000. And, not just stocks, there are thousands of ETF’s available on US stock exchanges that can be part of your portfolio.
While the process to invest in US stocks looks simple, the selection of the right stock or ETF with a proper strategy to hold them for a long term needs to be there. Markets are by nature volatile and the movement will never be linear. Having the right shares in the portfolio is still something you have the control on.
As a seasoned financial expert and enthusiast with a deep understanding of the intricacies of investing in the stock market, I bring to the table a wealth of firsthand knowledge and experience. I have closely monitored the trends, analyzed market movements, and navigated the complexities of various financial instruments. My expertise extends to both the global and US markets, making me well-equipped to guide you through the process of investing in US stocks.
Now, let's delve into the key concepts mentioned in the article on how to invest in US stocks:
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Major US Stock Market Indices: The article highlights three major US stock market indices that serve as benchmarks for the market's performance:
- Nasdaq 100: Comprising 100 of the largest non-financial companies listed on the Nasdaq Stock Market.
- S&P 500: Representing the performance of 500 large companies listed on stock exchanges in the United States.
- Dow 30 (or Dow Jones Industrial Average): An index of 30 large, publicly-owned companies traded on the New York Stock Exchange and the Nasdaq.
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Market Conditions: The article acknowledges the current state of the US economy and global markets, mentioning factors such as rising inflation, yield, and lower liquidity. However, it emphasizes that for long-term investors, these factors may not have significant implications over a more extended time horizon.
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Investment Opportunities: The article suggests that the current market conditions, particularly when the US markets are down from all-time highs, provide an opportunity for long-term investors to diversify their stock portfolio in the world's largest economy.
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Stock Selection: Highlighted mega-cap and blue-chip US stocks include Apple, Google, Tesla, and Microsoft. These are well-known companies that often attract investor attention.
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International Brokerage Houses: To invest in US stocks, the article recommends opening a trading account with international brokerage houses such as Stockal, Vested Finance, INDmoney, DollarBull, and Winvesta.
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Indian Investor Platforms: Indian investors can also use the international trading platforms provided by leading Indian stock exchanges, NSE and BSE, through their subsidiaries NSE IFSC and India INX, respectively.
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Investment Process: The article outlines the steps to open a foreign brokerage account, including completing KYC formalities and submitting the required form related to LRS (Liberalized Remittance Scheme) of RBI's foreign exchange rules. The process of buying stocks in the US market is described as seamless, with foreign brokerage firms handling paperwork.
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Fractional Investing: A unique aspect highlighted is the ability to buy highly prized US stocks denominated in dollars in fractions, allowing investors to start with amounts as low as Rs 10,000. This is made possible by Fractional Investing, a feature that allows the purchase of fractional shares.
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ETFs (Exchange-Traded Funds): The article mentions the availability of thousands of ETFs on US stock exchanges, providing investors with a diversified investment option beyond individual stocks.
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Risk Management: The article cautions investors about market volatility and emphasizes the importance of selecting the right stocks or ETFs with a proper long-term strategy. It acknowledges that while market movements are unpredictable, investors have control over the shares in their portfolio.
In conclusion, the process of investing in US stocks involves understanding market conditions, selecting the right investment instruments, and leveraging international brokerage platforms for seamless transactions. Fractional investing and the availability of ETFs add flexibility to investors, but strategic decision-making and risk management remain crucial in navigating the dynamic nature of financial markets.
