US Stock Market Investing for Indians
Learn how to invest in the world's largest market and potentially earn better returns while diversifying your portfolio.
Why Consider US Stock Market Investing?
Many Indian investors are curious about the US stock market but don't know where to begin. This guide will walk you through the entire process - from transferring money to buying your first stocks, understanding taxes, and bringing your profits back to India.
The US market offers access to global giants like Apple, Tesla, and Google, along with the potential for better returns and the benefit of dollar appreciation against the rupee.
1. Why Invest in US Stocks?
Comparative Returns
Over the past 5 years (2017-2022):
- Indian Sensex returned 101% (doubled your money)
- US S&P 500 returned 91%
- USD appreciated 17% against INR
Net result: ₹1 lakh invested in US markets would have grown to ₹2.24 lakh vs ₹2 lakh in India.
10-Year Performance
- Sensex: 245% return (13% annualized)
- S&P 500: 220% return
- USD appreciation: 47% (₹50 to ₹75)
Net annualized return: 17% from US vs 13% from India.
Portfolio Suggestion:
Consider allocating 35-40% to US stocks, 35-40% to Indian stocks, and the rest to other assets like crypto or startups for diversification.
2. How to Transfer Money to US
Liberalized Remittance Scheme (LRS)
Indian residents can send up to $250,000 (≈₹1.8 crore) per financial year abroad for investments under LRS.
Traditional Bank Process:
- Cumbersome paperwork
- High fees (₹1000-2000 per transfer)
- Unfavorable exchange rates
Modern Solution (e.g., INDmoney):
- Zero transfer fees
- Only GST applicable (₹45 on ₹5000 transfer)
- Best exchange rates
- Small transfers possible (even $100)
Example: Transferring ₹65,000 costs just ₹117 in GST vs ₹2000+ through traditional banks.
Process:
- Money sent from your Indian bank account
- Converted to USD and transferred to State Bank of Mauritius (SBM) account
- Funds available in your US investment account (typically within 24 hours)
3. How to Buy US Stocks
Brokerage Account
Platforms like INDmoney use DriveWealth (a US-based brokerage) to facilitate stock purchases. Your stocks are held securely with DriveWealth, not the intermediary platform.
Fractional Shares Advantage
Unlike India, US markets allow buying fractions of expensive stocks:
Example:
Tesla share price = $1025 (≈₹75,000)
With $400 (≈₹30,000), you can buy 0.39 shares of Tesla
This makes high-value stocks accessible to small investors.
What to Buy?
For beginners, consider ETFs (similar to mutual funds):
Recommended ETF: VOO (Vanguard S&P 500 ETF)
Tracks top 500 US companies - perfect for passive investors who want exposure to the US market without stock-picking.
4. How to Sell US Stocks
Selling is as simple as buying:
- Select the stock you want to sell
- Choose amount in dollars or number of shares (can be fractional)
- Place sell order (executed when US market opens)
- Proceeds credited to your US account
Tip:
You can set up systematic investment plans (SIPs) in ETFs like VOO for disciplined investing.
5. Taxes & Charges
Charges
- Buying/Selling: Free on platforms like INDmoney
- Withdrawal to India: $5 flat fee (recommend withdrawing ≥$500 to keep cost ≤1%)
- Large transfers (>₹7 lakh): 5% TDS (claimable in tax returns)
Capital Gains Tax
Short-term (held <2 years)
Taxed as per your income tax slab
Long-term (held ≥2 years)
20% tax with indexation benefits
Dividend Tax
- US withholds 25% tax on dividends
- You receive 75% directly
- The 25% can be claimed when filing Indian tax returns (under US-India tax treaty)
6. Bringing Money Back to India
The process is straightforward:
- Sell your US stocks
- Initiate withdrawal to your Indian bank account
- Pay $5 withdrawal fee
- Money credited in INR based on current exchange rate
Remember:
When you bring dollars back to India, you're actually helping the Indian economy by increasing forex reserves.
Start Your US Investing Journey Today
The US stock market offers Indian investors:
- Access to world's leading companies
- Potential for better returns
- Dollar appreciation benefit
- Portfolio diversification
- Fractional share ownership
With modern platforms making the process seamless and affordable, there's never been a better time for Indians to invest in US markets.
Disclaimer:
This blog is for educational purposes only. The examples given are not recommendations. Please do your own research or consult a financial advisor before investing. Past performance is not indicative of future results.