The NASDAQ (National Association of Securities Dealers Automated Quotations) is a well-known stock exchange in the United States, offering a range of investment opportunities to individuals. If you are an Indian investor looking to diversify your portfolio, investing in NASDAQ can be a good option. In this guide, we will cover all the key aspects of NASDAQ investing and explain how to invest in NASDAQ from India.
In today’s technology-driven world, it is possible to invest in the US stock markets from India in an easy and convenient manner. There are several reasons why you should invest in the US stocks markets, watch the video to learn about 5 reasons you should invest in the US stock markets.
One way to invest in the US markets is to invest in Nasdaq stocks i.e. stocks listed on the Nasdaq, an exchange based in New York. It is the world’s second-largest stock exchange in the world in terms of equity market capitalization. You can invest in Nasdaq stocks via two indexes that the exchange has created – the Nasdaq-100 and the Nasdaq composite. The Nasdaq 100 is a large-cap growth index and consists of 101 non-financial companies listed on the Nasdaq stock exchange. Whereas the Nasdaq composite includes all the companies listed on Nasdaq. In this article, Nasdaq refers to the Nasdaq 100 index.
So, how to invest in Nasdaq from India? Here are four ways you can do so.
1. Invest directly in Nasdaq stocks
You can directly invest in the world’s largest technology companies like Apple, Microsoft, Alphabet Inc.(Google), Meta Platforms Inc (Facebook), and others listed on Nasdaq by opening a US brokerage account either through technology platforms like Vested which offer this service, or a foreign brokerage that has a direct presence in India. At Vested, our goal is to allow you to invest in US stocks easily. To invest, you do not need to pay any brokerage fees. Vested’s process is completely paperless and can be completed in a matter of minutes. All you need is your PAN number, an image of your PAN card, and address proof.
For investing in US stocks, you need to wire funds to the US. As an Indian resident, you are allowed to do this under the RBI’s Liberalized Remittance Scheme which lets you remit up to US $250,000 per year, per person.
One concern for investors who want to know how to invest in Nasdaq stocks from India is that some of the stocks you may want to buy are very expensive. For example, the price of an Amazon share is over $3,000, which is more than 2.2 lakh. Don’t worry, you can now actually buy fractional shares, which means you can get started by investing as little as $1 in your favorite companies.
2. Invest in US ETFs that track the Nasdaq 100 index
The other way you caninvest in Nasdaq from India is through ETFs. ETFs refer to a collection of many stocks/bonds which are traded under one fund. They are similar to mutual funds. However, ETFs are traded on the US stock exchange with real-time pricing and provide an easy and cheap way to get exposure to a sector or a group of companies. One option you have is to buy an ETF on a platform like Vested. For example, Vested lets you invest in index ETFs like the Invesco QQQ Trust which tracks the NASDAQ 100 index. Some of the largest holdings of this ETF include companies like Amazon, Apple, Microsoft, Meta (Facebook), Netflix and Google (Alphabet), and Tesla.
3. Buy ETFs in India that track the Nasdaq
Another way to invest in Nasdaq from India is to buy ETFs available in India that invest in US indexes like the Motilal Oswal Nasdaq 100 ETF, or the ICICI Prudential Nasdaq 100 index fund. You can invest in these ETFs without opening a new US brokerage account. However, your returns might be impacted by tracking errors that these ETFs suffer from. To know more about tracking errors, watch this video.
4. Invest in international mutual funds that invest in Nasdaq stocks
In this case, you will typically be investing in funds of funds i.e. a local mutual fund that invests in a mutual fund available in the US which invests in the Nasdaq. Note that there is no investment limit as an investment will be made in Indian rupees. However, this approach may turn out to be more costly. You will have to pay an annual expense ratio (fees charged to manage the fund). The expense ratio of these funds tends to be higher. This is because apart from the general India fund management fee, it also includes an additional expense charged by the underlying international schemes they invest in. Also even if the fund you pick is not a fund of funds, the expense ratio for these mutual funds tend to be higher than 2%.
As we saw, there are several ways to invest in Nasdaq from India and be a part of the world’s second-largest stock exchange.
NASDAQ 100 Index
The NASDAQ 100 Index is a leading stock market index that represents the largest 100 non-financial companies listed on the NASDAQ stock exchange. It is widely recognized as a benchmark of the technology sector’s performance and is widely followed by investors. The NASDAQ 100 Index comprises companies that are leaders in various technology-related industries, including information technology, consumer technology, health technology, and more. Some of these large and well-known companies include Apple, Amazon, Facebook, and Google. These companies are known for their innovation, growth, and profitability, making the NASDAQ 100 Index an attractive option for investors seeking exposure to technology-related companies.
Investing in the NASDAQ 100 Index is a convenient way for investors to gain exposure to a broad range of leading technology-related companies. Through exchange-traded funds (ETFs) that track the NASDAQ 100 Index, investors can invest in a number of these companies, thereby reducing the risk associated with investing in a single company. Additionally, the NASDAQ 100 Index is considered a relatively stable and diversified index, which gives investors the opportunity to participate in the long-term growth of the technology sector.
How to Buy NASDAQ Shares
To buy NASDAQ shares, you need to follow the steps mentioned above. Once you have opened your Vested account, you can place an order to buy the desired NASDAQ shares through your account.
Investing in the NASDAQ 100 Index from India can be a good option for individuals looking to diversify their portfolios. However, it is important to understand the regulations and procedures, conduct market research, and regularly monitor your investment. With the right approach and expert advice, investing in NASDAQ can be a rewarding experience.
Things to Consider Before Investing in NASDAQ from India
Investing in NASDAQ can be a good way to gain exposure to the technology sector and take advantage of the growth and innovation taking place in the industry. However, before investing in NASDAQ, it is important to consider a few key factors to help ensure your investment is successful.
- Diversification: It is important to diversify your portfolio when investing in NASDAQ. Consider investing in a mix of different companies and industries to reduce the risk associated with investing in a single company or sector.
- Market conditions: Keep an eye on market conditions and the overall state of the economy. Economic recessions, for example, can negatively impact the performance of technology stocks.
- Company financials: Research the financial health of the companies you are considering investing in. Look at factors such as earnings, revenue growth, and debt levels to help determine their long-term viability.
- Investment time horizon: Consider your investment time horizon and make sure you are comfortable with the potential volatility of technology stocks. Technology companies can experience significant swings in stock prices in the short-term, but they may also have the potential for long-term growth.
In conclusion, investing in NASDAQ can be a good way to participate in the growth of the technology sector. That said, it is important to consider diversification, market conditions, company financials, and your investment time horizon, to help increase the probability of success for your investments.
Frequently Asked Questions (FAQs):
What is NASDAQ?
Nasdaq is a global stock exchange based in the United States. It was founded in 1971 and is headquartered in New York City. Nasdaq is the second-largest stock exchange in the world by market capitalization, after the New York Stock Exchange (NYSE). It operates several marketplaces, including the Nasdaq Stock Market, which is known for trading technology-related stocks.
The Nasdaq Stock Market is a well-known electronic exchange that operates through a network of market makers and electronic trading systems. It lists a wide range of companies, including technology startups, biotechnology firms, and more established companies. The Nasdaq is known for its use of advanced technology and innovative trading systems, making it a popular choice for companies and investors looking for fast, efficient, and transparent markets.
What is the NASDAQ 100 Index?
The NASDAQ 100 Index (different from NASDAQ, which is the stock exchange itself) is a leading stock market index that represents the largest 100 non-financial companies listed on the NASDAQ stock exchange. The NASDAQ 100 Index comprises companies that are leaders in various technology-related industries, including information technology, consumer technology, health technology, and more.
Can Indian residents invest in NASDAQ?
Yes, Indian residents can invest in NASDAQ subject to regulations set by the Reserve Bank of India (RBI). Per RBI guidelines, Indian residents can invest up to $250,000 per financial year in foreign securities.
What are the investment options for investing in NASDAQ?
There are several investment options for investing in NASDAQ, including investing in individual NASDAQ-listed stocks, exchange-traded funds (ETFs), or mutual funds that invest in NASDAQ-listed stocks.
What is the NASDAQ 100 Index?
The NASDAQ 100 Index is a stock market index that consists of the largest 100 non-financial companies listed on the NASDAQ stock exchange.
What is the process for investing in NASDAQ from India?
The process for investing in NASDAQ from India involves opening your account on Vested. This process only needs 3 documents:
- Your PAN number
- An image of your PAN card
- An address proof