What are US stocks?
Similar to the BSE and NSE in India, US stocks are traded on major US exchanges such as the NASDAQ and the New York Stock Exchange (NYSE). There are indices which benchmark these exchanges and measure the performance of the stock market.
Similar to India’s SENSEX and NIFTY, the three key indices for US equities are the Dow Jones Industrial Average, the S&P 500, and the NASDAQ Composite. The Dow tracks the 30 largest blue-chip businesses listed on U.S. exchanges, the S&P 500 consists of 500 significant companies from various industries, and the NASDAQ Composite measures the value of NASDAQ-listed equities.
Types Of US Stocks
According to their total market value, or market cap, US stocks can be broken down into one of four separate categories. There is a market cap-based threshold for each of these groups. These limits alter in response to changes in stock prices because the market cap is determined by stock price:
- Mega-Cap
Mega cap stocks are the largest companies based on market capitalization. Typically, the market capitalization of mega-cap corporations exceeds $200 billion.
- Large-Cap
The market capitalization of large-cap stocks exceeds $10 billion. Large-cap stocks, sometimes known as big caps, represent established corporations with consistent sales and earnings. Typically, large-cap stocks are highly liquid. Due to their size and stability, large-cap companies are suitable for investors with a low tolerance for risk.
- Mid-Cap
Market caps for midcap companies fall between $2 billion and $10 billion. High-potential businesses and mid-caps anticipate growth in revenues and profitability. Compared to mega-cap and large-cap stocks, midcap stocks are riskier and are best suited for investors with a moderate appetite for risk.
- Small-Cap
Market capitalization for small-cap stocks ranges from $300 million to $2 billion. Although they have a higher risk than other stock types, small-cap stocks have tremendous potential for growth. Investors with a high tolerance for risk and those willing to put in the effort to thoroughly analyze high-quality stocks might consider investing in small caps.
How To Invest In US Stocks?
Through Kuvera, Invest in US stocks from India. If you think some US stocks are too expensive, you can start your US investment journey for as little as $1 by using fractional trading. You may buy US stocks online with ease thanks to Kuvera’s classification of them according to market cap within each category.
ETF investments are another way to spread your risk and benefit from US stock market gains. With Kuvera, you can pick from a variety of ETFs depending on your risk tolerance and expected returns.
Click here to explore US stocks and ETFs on Kuvera.
Things To Keep In Mind When You Want To Invest In US Stocks
- Invest in the Company you believe in
This is a universal investing principle. Always put money into businesses you trust! Having a personal connection with the company not only enables you to choose your investment more wisely but also keeps you informed of what is going on behind the scenes.
- Portfolio Diversification
Listed companies on the US stock market account for over 40 percent of the global market capitalization. Therefore, Indian investors who invest in the US stock market play on a considerably bigger playing field than those who invest in the Indian stock market. To be precise, over 10 times larger. This will naturally facilitate geographical diversity. Therefore, Indian investors should diversify their portfolios to reduce portfolio risk and take advantage of this space.
- Currency Exchange rate
When investing from India, rupees are translated to dollars prior to purchasing and selling stocks on the US stock market. Due to the frequent swings in currency exchanges, investors can occasionally miscalculate their profits and losses. Therefore, keep a look out for this!
- Interest rate
Do your homework on the company you are investing in at all times! Due to how simple it is for both small and large businesses to obtain loans in the US, everyone is aware that the US economy is heavily indebted. This results in the company’s high cost of servicing the debt, which has an impact on the overall economy.
How To Invest In US Stocks Through Kuvera?
To open an account on Kuvera via Vested, you will need –
- Â PAN number
- An image of your PAN card
- A proof of address (you can use an Aadhar card, your utility bill, mobile phone bill, bank, or credit card statement).
There is a one-time account setup fee of ₹399 to create your US investing account. Please note, that there is no cost involved to buy/sell either stocks or ETFs on Kuvera via Vested.
Download the best app to invest in US stock market.
FAQS
- How is taxation levied on US investment?
There are two categories of taxation events for US stock users:
(1) Taxes on capital gains: This gain is subject to taxation in India. In the US, there are no taxes. The amount of taxes you must pay in India will vary according to when you sell your investment. If you sell your US stock after 24 months, the gain is considered long-term and is subject to a 20 percent tax with indexation benefit. Short-term capital gains are those that have been held for less than 24 months and are taxed in accordance with your income tax bracket.
(2) Dividend taxes: In the US, dividends are taxed at a fixed rate of 25%, unlike capital gains. Thankfully, there is a Double Taxation Avoidance Agreement (DTAA) between the US and India that enables taxpayers to deduct income tax already paid in the US. You can use the tax you already paid in the US to lower the amount of Indian income tax you must pay. This tax is accessible as a foreign tax credit.
- What is the Liberalized Remittance Scheme?
The LRS is a set of policies that govern the maximum remittance amount and its purpose.
Under the LRS, an Indian resident can annually transfer up to $250,000 abroad without the approval of the RBI. The LRS has made it simpler for Indian citizens to study abroad, travel internationally, and invest in foreign countries.