Investing in potential foreign stocks such as Apple, Google, Facebook seems to be a bit complicated, doesn’t it?
We all have grown up using the services provided by these companies. Needless to say, these companies are well known as the global leaders in their respective business which will produce many benefits in the future. Aside from using their services, many of us often think of buying these stocks at a reasonable rate.
Despite knowing the fact that these stocks are not listed on Indian stock exchange, Indian retail investors now can invest these stocks without a flick of a switch. As the sudden demand of US stock increases among Indian retail investors, several platforms such as Swastika Investmart have allowed Indian investors to invest directly in the US stock market.
The popular US stocks Facebook, Apple, Amazon, Netflix and Google are known as FAANG stocks and we all know that these 5 companies play an active role in your life. The term FAANG was first coined by JIM Cramer, host of “Mad Money” in 2012.
As an investor, you may know that India’s share of world GDP is nearly 7%, which means 93% of the world’s GDP remains unused. Today, we have an opportunity to invest in the shares across the economy, which means diversification across economies. Earlier, we used to 100% of our portfolio in Indian stocks and bonds. True diversification means diversification across countries.
Here are The Steps and Procedures to Invest in International Stocks from India:
- Invest in US stocks (A Direct Way):
To invest in US stocks, you are required to open a Demat account with a brokerage company that offers a cross border trading facility.
The complete set of a process is here:
I). Open a Demat account with a brokerage firm who has tied up with international partners that offer overseas trading facilities.
II) Submit your Know your Customer (KYC) form along with a separate account opening form.
III) To successfully trade in the foreign stock market, you are required to transfer the amount to the international partner of your domestic broker.
IV) Funds are transferred to the international partner as below:
- Submit application form under LRS. Form A2 will be available with your brokerage firm.
- Sign a form for Foreign Exchange Management Act (FEMA). You can take this form from your brokerage house.
- Fill the form authorizing the designated bank branch as an authorised dealer. This form will also be available at your brokerage firm.
Once the funds are successfully transferred to international broking partners, you can start buying and selling of foreign stocks online.
Few Things You Need To Know Before Investing in Foreign Stocks
- As per RBI rules, individuals are allowed to remit up to $2,50,000 per financial year to any country under the liberalised remittance scheme (LRS) including current account and capital account transactions.
- Margin trading or any kind of leveraged trade is not allowed in these accounts, however, one can do intraday square-off trades.
- Before investing money in the international market, it would be ideal to check whether the foreign companies you want to invest in are strong or not.