How to Invest in US Stocks - A Complete Guide for Retail Individual Investors

Introduction

The world’s most powerful and innovative companies-Apple, Microsoft, Tesla, Google, Amazon-are all listed on US stock exchanges. Until a few years ago, investing in these global giants was a privilege limited to institutional or HNI investors. But in 2025, technology and regulatory progress have made global investing accessible even for Indian retail investors, allowing them to own a fraction of the world’s strongest brands from their smartphones.

This guide, written from the perspective of a 20-year market analyst, will help you understand how to invest in US stocks from India, covering everything from the benefits and platforms to taxation and compliance under RBI’s Liberalised Remittance Scheme (LRS).

Why Invest in the US Stock Market?

The US stock market is the largest and most liquid financial ecosystem globally, representing more than 40% of total global market capitalization. Here’s why it’s a smart addition for Indian investors:

1. Global Diversification

Investing in US stocks provides exposure to multiple sectors-technologies, healthcare, energy, and consumer goods-reducing dependence on Indian markets.

2. Access to Innovative Companies

You can participate in the growth stories of Apple, Tesla, Nvidia, Microsoft, and Google-companies that lead global innovation.

3. USD Appreciation Advantage

Historically, the US dollar has appreciated against the Indian rupee by ~3-5% annually. This adds an extra layer of return when you repatriate profits back to INR.

4. Strong Corporate Governance

US-listed firms follow strict SEC compliance and transparency standards, ensuring investor protection and accountability.

Ways Retail Investors Can Invest in US Stocks

Indian investors can choose between direct and indirect routes to access the US market.

1. Direct Investment via Global Platforms

Platforms like Vested Finance, INDmoney, Fi Money, and Groww Global allow you to open a US brokerage account and invest directly in NYSE and NASDAQ stocks.

Steps include:

• Create an account and complete KYC (PAN, passport, address proof).
• Transfer funds under RBI’s LRS (up to $250,000 per year).
• Convert INR to USD through an authorized bank.
• Start investing in US stocks or ETFs.
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Advantages:

• Buy individual companies or ETFs.
• Full control over portfolio composition.
• Option to invest in fractional shares.
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Example:
You can own $10 worth of Apple (AAPL) shares instead of buying one full share priced over $170.

2. Indirect Investment via Mutual Funds or ETFs

If you prefer simplicity, you can invest through Indian mutual funds that hold US equities.

For example:

• Franklin India Feeder - Franklin US Opportunities Fund
• Motilal Oswal Nasdaq 100 Fund of  Fund
• ICICI Prudential US Bluechip Fund
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Benefits:

• No need for LRS remittance.
• Managed by professional fund houses.
• Ideal for investors who want passive exposure.
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3. Fractional Share Investing

Fractional investing lets you buy a small portion of a high-priced share.

Example: Investing ₹800 in Amazon (AMZN) instead of $130+ for a full share.

Why it matters:
This democratizes global investing, especially for beginners who want diversification with smaller amounts.

Step-by-Step Process to Start Investing in US Stocks

Step 1 - Choose a Trusted Platform

Compare major players before you start:

Platform	Key Features	Minimum Investment	Notable Advantage	Link
Motilal Oswal	International investing through partner tie-ups with US brokers	$1	Most Experienced & Trusted Indian Broker	Open Free Account
Vested Finance	Direct US brokerage, curated portfolios	$1	Fractional investing, thematic portfolios	Open Account
INDmoney	Integrated global investing & tracking	$1	Simple INR-to-USD transfer	Open Account
Fi Money	Seamless app interface	₹100	User-friendly mobile experience	Open Account

For Open Demat Account in Motilal Oswal needs Full KYC

Step 2 - Complete KYC & LRS Formalities

You must submit:

• PAN & passport copy
• Address proof
• Form A2 (for overseas remittance under LRS)
• Bank’s purpose code (S0001 - “Investment abroad”)

The RBI’s LRS limit allows an Indian resident to invest up to USD 250,000 per financial year in foreign assets.

Step 3 - Fund Your US Brokerage Account

Transfer funds via your bank’s outward remittance facility.
Note that:

• Banks may charge ~1-2% conversion markup.
• A Tax Collected at Source (TCS) of 5-20% may apply on remittance (as per latest Finance Act).
• The remitted amount is converted into USD and credited to your US trading account.
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Step 4 - Select Stocks or ETFs

For beginners, start with ETFs tracking broad indices like:

• S&P 500 (SPY, IVV)
• Nasdaq 100 (QQQ, Invesco)
• Vanguard Total Market ETF (VTI)

For experienced investors, research large-cap growth stocks (Apple, Microsoft, Tesla, Nvidia) or dividend-yielding ETFs.

Step 5 - Place Your Order

Understand order types:

• Market order: Executes instantly at current price.
• Limit order: Executes at your specified price.

Trading hours (IST):

• NYSE/Nasdaq: 7 PM - 1:30 AM (Standard Time)
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Step 6 - Track, Rebalance & Manage Taxes

Monitor performance quarterly.
Diversify across sectors-Tech, Healthcare, Financials, Energy.
Rebalance annually to maintain your target allocation.

Taxation on US Stocks for Indian Investors

Taxation is a crucial aspect when investing abroad.

1. Dividend Tax

• US government levies 25% withholding tax on dividends.
• If you earn $100 as dividend, you receive $75 post-tax.
• Under the India-US DTAA, you can claim tax credit while filing ITR using Form 67.
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2. Capital Gains Tax

Holding Period	Type	Tax Rate in India
Less than 24 months	Short-term	Taxed as per your slab
More than 24 months	Long-term	20% with indexation

Example:
If you invested ₹1 lakh and sold at ₹1.5 lakh after 2.5 years, your ₹50,000 gain is taxed at 20% (₹10,000).

3. Reporting in Income Tax Return

You must declare foreign assets in Schedule FA of your ITR.
Non-disclosure can attract penalties under the Black Money Act.

Benefits of Investing in US Stocks

1. Portfolio Diversification

Reduces risk by spreading investments across multiple economies.

2. Currency Hedge

If INR depreciates against USD, your foreign holdings appreciate in INR terms.

3. Access to Global Innovation

You invest in companies leading AI, EV, Cloud, and Healthcare revolutions.

4. Long-Term Wealth Creation

S&P 500’s historical average return: ~10-11% p.a. over the last 30 years, even after multiple recessions.

5. Global Recognition

US companies follow strong investor-centric policies, dividend payouts, and buybacks.

Risks & Challenges

1. Currency Volatility

USD-INR movement directly impacts your returns.

2. Transaction & Forex Costs

Conversion markup, remittance charges, and TCS can reduce net yield.

3. Regulatory & Tax Complexities

You must comply with FEMA, LRS, and DTAA norms.

4. Limited Market Hours

Trading happens late at night (India time), requiring patience and planning.

5. Over-Concentration Risk

Avoid investing heavily in a single US stock-diversify across ETFs or sectors.

Best US Stocks and ETFs for Beginners

Company / ETF	Sector	5-Year CAGR	Remarks
Apple (AAPL)	Technology	28%	Strong fundamentals, recurring revenue
Microsoft (MSFT)	Cloud / AI	25%	Global enterprise software leader
Amazon (AMZN)	E-commerce / Cloud	22%	AWS growth story
Nvidia (NVDA)	Semiconductors / AI	40%	Leading GPU manufacturer
Tesla (TSLA)	EV / Clean Tech	32%	High volatility, long-term potential
SPDR S&P 500 (SPY)	Index ETF	10%	Broad US market exposure
Invesco QQQ (QQQ)	Nasdaq 100	13%	Tech-heavy diversified ETF
Vanguard Total Market (VTI)	Multi-sector ETF	11%	Low-cost, diversified exposure

 

Expert Tips from a 20-Year Market Analyst

• Start Small, Scale Gradually - Begin with $100-200 per month using fractional investing.
• Follow Dollar-Cost Averaging (DCA) - Invest periodically to average out volatility.
• Prioritize ETFs Initially - They offer built-in diversification.
• Reinvest Dividends - Enable compounding.
• Stay Informed but Patient - Focus on long-term growth, not daily price action.
• Review Taxation Annually - Consult your CA for DTAA compliance.
• Avoid Over-Leverage or Margin Trading - Especially in global markets.
• Keep Allocation Balanced - Limit US exposure to 15-25% of total equity portfolio.

Final Thoughts

Investing in US stocks is no longer a complex dream-it’s a strategic necessity for modern investors seeking global exposure.
In 2025, platforms like Motilal Oswal, INDmoney, Vested Finance, and Fi Money have made this process seamless. With the right mindset, compliance awareness, and long-term discipline, even small monthly investments can compound into significant global wealth.

In short:

“Don’t just invest in India, invest in the world. Let your money work across borders.”

Start your global investment journey today.

Compare platforms like Motilal Oswal, INDmoney, Vested, complete your KYC, and begin owning shares of the world’s top companies right from India.

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FAQs on Investing in US Stocks

Q1: Can Indians directly invest in US stocks?
Yes. Under RBI’s LRS, you can invest up to $250,000 annually through approved brokers.

Q2: What is the minimum investment amount?
Platforms like INDmoney and Vested allow you to start from as low as $1.

Q3: Do I need a US bank account?
No. Your Indian account is linked via remittance; the broker handles conversions.

Q4: Are these investments legal?
Yes. Global investing under LRS is fully legal if done through RBI-approved channels.

Q5: How are profits taxed?
Capital gains are taxed in India; dividends are taxed in the US with DTAA benefits.

Q6: Can I withdraw funds anytime?
Yes. Withdrawals are credited in USD, converted back to INR via your bank.