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If you’re thinking of investing in US Equities from India then, you’re not alone! A lot of parents are now investing in US Equities to secure their or their children’s future. This becomes all the more important if you or your children are studying or settled abroad. So, why exactly are people so excited about investing in the US and what’s the fuss about US stock trade? Well, the answer is two-fold, let’s take a look.
The First Reason To Invest In US Equities: The Indian stock market or SENSEX as most of us know it has performed well, but its performance pales in comparison to the US Stock Market. While there are multiple indexes, looking simply at the DOW Jones index which is one of the world’s most crucial stock markets, shows this disparity. Over the past decade, the US Market (DJI) has returned 196% returns while the SENSEX has returned 150%. While the growth of the Indian market is by no means small, the jump in US Equities is phenomenal.
The Second Reason To Invest In US Equities: Currency is another reason to invest in US Equities. The value of the INR has changed dramatically over the past year. Not only does this have an instant impact but it also snowballs thanks to compounding and it is evident that this would have had a rather undesirable impact on the returns. There has been a drop of nearly 40% in the USD - INR exchange rate due to which someone who invests in US Equities would have earned substantially higher returns than someone who invested the same amount in the Indian markets. You can consult a Cube Wealth Coach or download the Cube Wealth App.
This has a huge impact on how much money one makes as a consistent and disciplined investor. For example, if you invested $ 1000 in the Indian Stock Market (SENSEX) 10 years ago, today it would have been worth $ 1800 - an increase of roughly 80%. Amazing right? Well, if you invested the same $ 1000 in the US Stock Market you would have seen a 296% rise in value - which would make it $ 2960. In rupee terms, the same INR 72,000 (roughly) would have grown to INR 2.12 lakh if invested in US Equities versus INR 1.29 Lakh if invested in the SENSEX.
If you wish to Invest In US Equities please contact the Cube Wealth team for step by step guidance. You can also read the following blogs to develop a deeper understanding of US Equity investments:
If you invest in US Equities from India there will be two main taxation scenarios that can apply to you. These are only applicable when you realize your returns - investing in itself will not attract taxation.
If you hold your investments for 2 or more years then the profit you earn on your investment will be considered as a long term capital gain. These gains are then taxed at 20% + surcharges as per current rules around long term capital gains for Indian investing in US Equities. It is a good idea to consider this before you invest in the US stock market so that you can plan your sale and redemption accordingly. You can consult a Cube Wealth Coach or download the Cube Wealth App.
On the other hand, if you hold your investments for a period shorter than 2 years i.e anything lesser than 23 months you will have to pay short term capital gains tax. The current tax rate applicable on short term capital gains for Indian investing in US Equities is 15% in the US. While in India you will pay the regular tax you pay as per your income slab under the Income Tax Act. This means your profit will be given to you after deducting a 15% tax amount in the US itself. You will luckily not have to pay tax on this investment separately in India because India has a Double Taxation Avoidance Agreement (DTAA) with the United States Of America.
To try, start with as little as $1
The NYSE - New York Stock Exchange and the NASDAQ - National Association of Securities Dealers Automated Quotations are the two major US stock exchanges.
Depends on a lot of factors like your goal, risk appetite and investment amount. Please consult a Cube Wealth Coach before making any investments.
Yes, you can but only through a brokerage firm and using a trading account.
The risks are higher when investing in US stocks because you are investing in a market you can't always keep track of. The lower liquidity and the fact that your losses will also be in USD further adds to that.
Investing in US equities for your child's future is a meaningful way to secure their financial well-being and provide opportunities for their future endeavors. By starting early and maintaining a disciplined approach, you can work toward building a substantial investment portfolio that has the potential to support their financial goals as they transition into adulthood. Remember that investing involves risks, so careful planning and ongoing monitoring are essential to achieve your financial objectives. You can consult a Cube Wealth Coach or download the Cube Wealth App.
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