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 here 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 â‚¹ 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.