Why US stocks are a game-changer for Indian investors Indian investors gain access to world-leading corporations and innovative sectors while benefiting from currency advantage and tax benefits. Options include mutual funds, ETFs, direct stock investments, and fractional ownership
Do you want to create a strong and globally diversified investment portfolio? Adding US stocks to your strategy could be the key. While the Indian stock market offers countless opportunities, the US stock market provides unique advantages, i.e., growth potential, stability, diversification, and access to world-leading corporations.#sr_widget.onDemand p, #stock_pro.onDemand p{font-size: 14px;line-height: 1.28;} .onDemand .live_stock{left:17px;padding:1px 3px 1px 5px;font-size:12px;font-weight:600;line-height:18px;top:9px} #sr_widget.onDemand .sr_desc{margin:0 auto 0;} #sr_widget.onDemand .sr_desc{color: #024d99;margin-top:10px;} #sr_widget.onDemand .crypto .live_stock .lb-icon{8px 6px 5px 3px !important} #sr_widget.crypto.onDemand a.text{border-bottom:1px solid #ccc;padding-bottom:5px;display:block;width:100%} #sr_widget.onDemand .sr_desc .text p, #stock_pro.onDemand .sr_desc .text p{font-size:12px;font-weight:400;}
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1. Access to world-class companies
The US is home to some of the biggest companies in the world, such as Apple, Netflix, Tesla, Meta, Amazon, and Alphabet (Google). These companies not only dominate their respective industries, but also influence global markets.
When you invest in US stocks from India, you gain access to such market leaders and benefit from their high rate of growth. And because these companies operate globally, their revenues are not tied to just one economy, which adds a layer of stability to your investments.
2. Portfolio diversification
While India is a growing powerhouse, having all your eggs in one basket isn’t wise as it can leave your portfolio vulnerable to country-specific risks. Factors like economic slowdowns, policy changes, or market volatility can impact your investments and reduce your returns.
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By adding US stocks to your portfolio, you diversify your risk and benefit from the stability of a mature market. The country operates on different growth drivers, such as advanced technology, healthcare, and financial services. This diversification means that even if one market faces high volatility, the others may remain stable or even grow.
3. Exposure to emerging innovations
The US stock market plays a dominant role in fields like Artificial Intelligence (AI), biotechnology, renewable energy, and cloud computing. As an Indian investor, this means getting exposure to cutting-edge sectors that may not yet be as developed in India.
4. Currency advantage
In 2010, one US dollar was worth around ₹45. On 10 January 2025, it stood at ₹86.03. This steady depreciation of the Indian rupee against the US dollar offers a big advantage for Indian investors. When you invest in US stocks, the currency’s appreciation over time adds to your returns when converted back to rupees. This currency movement can enhance the overall value of your investments, particularly for those holding US assets for the long term.
5. Tax benefits
One major concern for Indian investors is taxation. Dividends from US stocks are taxed at 25% in the US and deducted before the payout. For example, if you earn a dividend of $100, $25 is withheld as tax, and you receive $75. However, India’s tax treaty with the US ensures you don’t pay tax twice. Under the Double Taxation Avoidance Agreement (DTAA), you can claim credit for the $25 tax paid in the US when filing your tax returns in India.
Capital gains from US stocks are taxed only in India, and the tax rate depends on the holding period. If you hold US investments for less than 24 months, the gains are classified as short-term and are taxed at your applicable income tax slab rate. For stocks held longer than 24 months, the gains are classified as long-term and taxed at 12.5%.
6. Investment flexibility
Not long ago, investing in US stocks seemed complicated for Indian investors. Today, you can choose from various investment options, depending on your goals and preferences, such as:
A)Mutual funds
Mutual funds pool money from multiple investors and build a portfolio that is managed by professional fund managers. They invest in a wide range of US stocks, which helps you get instant diversification and reduce individual stock risk.
Mutual funds can be an ideal option for investors who want exposure to US equities but don’t want the hassles of actively managing their investments. These schemes can focus on specific themes, such as technology or healthcare, or even track broader indices like the S&P
B)500.Exchange-Traded Funds (ETFs)
ETFs trade on stock exchanges, which means you can easily buy and sell shares throughout market hours. ETFs generally have affordable expense ratios and provide exposure to entire indices, sectors, or themes, such as US tech stocks or clean energy.
C)Direct stock investments
This option is suitable for those who are knowledgeable about the US market and prepared to handle potential risks. It allows you to select specific companies based on performance, growth potential, or industry trends. While direct investment may help you earn high returns, it demands careful analysis, active monitoring, and smart risk management.
Note: You need a demat account to invest in US stocks directly or via ETFs.
7. Fractional ownership
Fractional ownership can be a game-changer for Indian investors interested in US stocks. It allows you to own a portion of a stock rather than having to buy a full share. This is particularly helpful for accessing expensive US stocks. Many online platforms and investment apps offer fractional shares and let investors start with as little as $1. This way, you can begin building a long-term portfolio of the best-performing US stocks within your budget. What’s more, the returns from fractional ownership, including dividends and capital gains, are proportionate to the size of your investment. This means that whether you invest $10 or $1,000, you still benefit from the growth of these global giants.
US stocks offer you a chance to expand your portfolio beyond the domestic market. You get access to global leaders, exposure to high-growth sectors, and the potential to earn significant returns through currency appreciation. This diversification reduces dependence on the Indian market and introduces stability during market fluctuations.
You can invest in US stocks directly via online platforms and apps that offer stocks, mutual funds, and ETFs focusing on US equities. With fractional ownership, you can begin with as little as $1. Systematic Investment Plans (SIPs) further allow you to invest regularly and make it simpler to build a robust portfolio over time.
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This story originally appeared on: India Times - Author:Faqs of Insurances
