How to Invest in Global Stocks From India – Step-by-Step Guide

For the last five years, Meera, a 28-year-old marketing professional from Mumbai, has been investing in Indian stocks. Her portfolio of ₹8,00,000 showed good performance. 

Nevertheless, she was interested in investing outside the Sensex and Nifty. One evening, she came across a news headline—Microsoft’s stock had gained 15% in six months.

"If I had invested just ₹50,000 in Microsoft, I could have made ₹7,500!" she thought. That’s when she decided to look beyond Indian markets and invest in global stocks.

At first, the concept seemed unclear because she had to navigate through RBI rules, forex charges, and taxation complexities. The information made sense after she simplified it. 

Here’s what she learnt:

Where can you invest?

Indian investors are also able to invest in the stocks of Apple, Tesla, and Google through mobile apps based in India called INDmoney and Vested.

Do you require lakhs to begin investing?

No! Some platforms permit fractional investing, which permits users to initiate investments with a $1 equivalent to ₹85 rather than purchasing whole stocks.

What about additional fees?

Banks and brokerage platforms charge a forex fee (0.5%-2%) when they convert INR to USD for investment.

How is tax calculated?

If you hold a global stock for over 24 months, you pay a 12.5% long-term capital gains (LTCG) tax (without indexation). Short-term gains are taxed as per your income slab.

Meera understood that investing overseas was not as difficult as it looked. If she could do it, so can you! 

In this guide, we will break it down for you one step at a time so you feel comfortable getting into global investment.

Why Should You Invest in Global Stocks?

Meera had been making Indian stock investments for years but was convinced she was somehow missing out. When she discovered that Apple was launching yet another new iPhone or that Tesla would be making record sales, she couldn't help but wonder, "Why am I simply a customer and not an investor?"

Here's what made her decide to give it a go:

• Diversification: She did not want to depend solely on the Indian market. By investing internationally, she diversified her risk across various economies.

• High-Growth Chances: Many Indian companies have not been able to match the growth rates of Google, Amazon, and Tesla. She wanted exposure to that type of growth.

• Hedge Against INR Depreciation: The rupee depreciates against the dollar every year. Investing in US equities allows her to hedge part of her money against foreign exchange risk.

Investing in foreign stocks wasn't a matter of being trendy for Meera—she wanted a stronger, future-proofed portfolio.

Select Your Mode of Investment: Direct or Indirect

When Meera wanted to invest in international stocks, she had two alternatives. To put them side by side, she made a simple table:

Step 1: Open an International Trading Account

Meera's first step was to open an account with an RBI-approved broker that facilitates Indians' investment in international stocks. She shortlisted two different platforms based on ease of use, fees, and INR-to-USD conversion facility.

Meera selected INDmoney for its reduced foreign exchange fees, but if you prefer no minimum investment, Vested might be an excellent option.

Select a broker that meets your requirements and begin your global investing journey today!

Step 2: Complete KYC & Fund Your Account

After Meera chose a broker, she needed to complete her Know Your Customer (KYC) authentication and fund her account for investment purposes.

KYC Requirements

As per RBI and SEBI rules, she provided the following documents:

• PAN Card: For tax purposes
• Aadhaar Card: For identification purposes
• Bank Details: For linking her bank account for deposit & withdrawal
• Tax Residency Status: For compliance with U.S. taxation laws (W-8BEN form for tax exemption on dividends)

Funding Your Account

Meera funded her account under the Liberalised Remittance Scheme (LRS), under which Indians can invest a maximum of $250,000 per annum in overseas markets.

Step 3: Pick Your Stocks—FAANG or Emerging Giants?

Now that Meera had financed her account, the thrilling part started—selecting the stocks! She had two primary options:

FAANG Stocks: The Blue-Chip Giants

They are some of the world's best-known, established giants. Meera was attracted to the FAANG stocks due to their track record:

• Facebook (Meta)
• Apple
• Amazon
• Netflix
• Google (Alphabet)

These firms exhibit stable growth and strong financials, making them a good bet for long-term investors.

Emerging Companies: High Growth Potential

Conversely, Meera was also interested in the new industries that had enormous growth potential. She studied companies in fields such as:

• AI (Artificial Intelligence)
• Electric Vehicles (EVs)
• Biotech

These industries have the potential to provide greater returns, but they are also riskier. Meera chose to diversify her portfolio with well-established giants such as Apple and new players in the AI and EV industries.

Meera’s Numerical Example:

Meera decided to invest ₹1,00,000 in global stocks. Here’s how she divided her investment:

Meera's investment plan balanced low-risk, consistent growth from FAANG stocks and higher-risk, higher-reward growth from companies in areas such as EVs and AI.

Step 4: Understanding Forex & Currency Exchange Rates

When investing in American stocks, Meera was aware that the exchange rate of INR to USD would have a direct effect on her investments. A good exchange rate translated into more dollars for her investment, whereas a bad rate would lower her returns.

Tools for Best Forex Rates

Meera utilised sites such as Wise and BookMyForex, which provided competitive rates and lower forex charges than regular banks.

1. Wise:

   
   

• Charges: Wise charges currency conversion fees of at least 0.57% based on the currency pair and transfer amount.

• Conversion Time: With normal transfers, currency conversion can take under 24 hours or, at the highest, 2 business days.

2.  BookMyForex:

• Charges: BookMyForex allows you to earn 2.5% to 6.5% as compared to your regular banks and money changers.

• Conversion Time: Forex orders are normally delivered on the same day if ordered with full payment and necessary documents before 1 PM on working days. Orders ordered after 1 PM are normally delivered the following working day.

Step 5: Taxation on Global Stocks in India

Investing in foreign stocks involves knowing about the taxes paid in the U.S. as well as in India. Meera ensured that she kept a check on these taxes:

Debt Consolidation: Can It Help You Invest?

Consolidation of debt is a method of bringing together several debts and consolidating them into one loan with a reduced interest rate.

Meera knew that before going into global investments, she had to assess her financial condition. One of the aspects was debt management. 

She understood that if she could minimise her interest expense and consolidate her debt management, it would release more cash for investments.

How Debt Consolidation Assists with Investing:

Lower Interest Payments: Consolidating high-interest loans (such as credit card balances) into one loan at a lower interest rate saves you money on interest. Meera utilised these savings to invest in her investment account.

Improved Cash Flow: With a smaller monthly payment, you have more disposable income to put into stocks, mutual funds, or even international markets.

Simplified Finances: Rather than having to balance multiple due dates, combining debts is a single payment to worry about, freeing up more time and attention to handle your investments.

How Meera Did It:

Meera had various credit card accounts and a personal loan. On researching, she consolidated her debt into a 7% personal loan per year, rather than the different interest rates that the credit cards had been costing her.

Before Debt Consolidation:

Meera was spending ₹12,500 a month on her current debts, which had high-interest charges.

After Debt Consolidation

Once she consolidated all her debts into one loan with an interest rate of 7%, Meera lowered her monthly expenditure to ₹9,000, releasing ₹3,500 a month, which she is now investing.

Common Mistakes to Avoid in Global Investing

1. Neglecting the Forex Effect

• INR depreciation can drain your profit while converting USD into INR.

• Meera tracked exchange rates and used Wise to have a good conversion. She saved ₹2,000 by waiting for a strong INR while sending a ₹100,000 transfer.

2.   Over-Diversifying

• Too much of everything can dilute your returns and disrupt your portfolio.

• Meera invested in 12 good stocks, splitting blue-chip and emerging stocks. She did not include 5 additional stocks with lower growth prospects.

• 12 Stocks: 8% average growth
• 17 Stocks: 6% average growth

3.  FOMO Investing

• Following trends such as crypto can result in risky, volatile investments.
  
• Meera did not invest in crypto mania and stuck to stable, long-term stocks such as Apple and Amazon.

• Crypto Investment: ₹50,000 → ₹30,000 (40% loss)
• Apple Investment: ₹50,000 → ₹57,500 (15% gain)

By remaining concentrated on quality investments, Meera prevented these mistakes from happening and developed a good portfolio.

Conclusion

Investing in Indian global stocks may appear complicated, but with some advice, it is a chance to diversify, tap into high-growth markets, and hedge against the depreciation of INR. Meera's experience demonstrates that one can begin small, even with fractional investments, and steer clear of common mistakes such as over-diversification or following trends.

Through proper platform selection, knowledge of forex fees, and consideration of taxes, anyone can start confidently constructing a worldwide investment portfolio. Whether a beginner or seasoned investor, making that move into overseas markets can vastly improve your monetary future.

FAQs

• Is it legally possible to invest in U.S. stocks in India?

Yes, through RBI's LRS scheme, you can invest a maximum of $250,000 annually in overseas stocks.

• What are the threats involved while investing in international stocks?

Risks due to exchange rates, taxes, and geopolitics are critical issues to weigh.

• How can I remit money from India to invest in international stocks?

You can utilise wire transfers, remittance services, or RBI-approved brokers such as INDmoney for hassle-free INR-USD transfers.

• Is there any secret fee in global investing?

Yes, forex conversion charges, brokerage charges, and taxes may eat into your returns.

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