The US economy is doing well and you and many Indians want to be part of the growth story. Indians are looking to buy shares of Google, Facebook and Tesla listed in the US. Sadly, these companies are not listed in India. These are great Companies for their earning potential and attract investors from across the Globe.
So, how can you invest in shares in the US? Well, Indian brokerage houses have tie-ups with Foreign Brokerage Houses to aid investments in the US and other International Markets. You would have to open an overseas trading account to trade in shares in the US/International Market.
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You can invest in shares outside India through the Liberalised Remittance Scheme or the LRS. The maximum permissible investment abroad through Liberalised Remittance Scheme is $2,50,000. This was introduced by the RBI in 2004. The amount invested abroad can be retained and reinvested in any overseas assets. Now, $1 is Rs 70. This amounts to Rs 1.75 Crores. This is more than $1 Million for a family of four people. That’s quite a sum to invest.
See Also: Foreign portfolio investments in India
If you are investing in International stocks, transaction charges are in dollars. Stock brokerage charges are higher compared to the Indian Stock Market. Annual and Maintenance charges are also higher. You must factor all these costs before investing in Facebook and Google shares in the US.
This simple example helps understand what happens if you invest in US stocks. When you bought the US stock the currency exchange rate was $1 = Rs 70. In the following year the currency exchange rate was $1 = Rs 65. You have lost 7.1% just because the rupee gained against the dollar. So, profits are subject to currency exchange rate fluctuations.
See Also: International Capital Markets
Do note: There are higher expenses and currency exchange rate fluctuations affect earnings.
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