Indian Stock Market vs US Stock Market Investment

US market attracts many investors but foreign investments with half knowledge can be dangerous. To start your US investment journey, you must be familiar with the pros and cons. Investing in US markets from India can be daunting to many. But international stock market allows you to diversify your portfolio. In this article, we will discuss few factors which give you the comparison between the Indian stock market vs US stock market.

 

• Portfolio diversification

 

Viram Shah, co-founder, and CEO of Vested Finance says, “What’s interesting about US stocks is that you not only get exposure to the United States but also to the world, as many companies have global operations but are listed there.” This tells you enough about the US market and the benefits of investing in it. Recently you must have observed a fall in equities due to the global pandemic and it ranged from 20% to 30%. But diversification of portfolio would have been effective during such times. When you invest across different asset classes like gold, international equities, debt, and equities the loss becomes much lower.

 

• Dollar as a Currency

 

In India we earn in INR and spend in Dollars. The value of the rupee is declining so it makes sense to invest in the dollar. As the rupee value decreases the portfolio of the Indian stock market declines in value as well as you make all the investments in INR. So, if you invest in the dollar the value of your investment increases.

 

• Global Factors

 

The US market offers the opportunity of investing in big global companies like Flipkart, Amazon, Instagram, etc. If your portfolio consists of such global companies, it will evolve with competitive trends. With these global companies, you get an opportunity to grow your corpus more effectively. Whereas Indian stock market investment involves comparatively small companies. In India, a company can go public only after 3 years of consecutive profits whereas in the US you can invest in major corporations leading their sectors with innovative offerings. This offers the investors an opportunity to invest in many innovative models.

 

• Research & Efforts

 

Investments in the Indian stock market and US stock market are accompanied by research for two economics. As multiple factors influence the international share market you must be up to date with these factors. The efforts required in the research can be tiresome and time-consuming. Whereas the Indian stock market has some edge over US markets when it comes to research and efforts involved. The research involved is huge and some may decide to let go of the higher profit potential of investing in US stocks from India.

 

• Market Volatility

 

When you consider long-term investments in US markets the volatility is low as compared to the Indian stock market. The Indian stock market has shown greater volatility as compared to the international share market. This is why investors are advised to spread their money across various assets as diversification lessens the risk factor. So if an investor has a diversified portfolio when he invests in the international stock market it is observed their portfolios move differently as compared to Indian indices.

 

• Sensex vs Dow Jones

 

It is usually advised to diversify geographically by investing in US markets. In the international share market, you will observe even distribution between sectors as compared to the Indian stock market. Dow has beaten the Sensex over 5 and 10 year time periods. Indian stock market trades at higher multiples and offers lower dividend yields as compared to the US market. But both the markets offer decent returns to their investors reason being few stocks which offer much of the gains.

 

How to Invest in US Stock Market from India?

 

• Opening an account through your banks

 

Many banks offer the service of opening a trading account. You can open your trading account with your bank. Many banks have tie-ups with foreign brokers with which you can begin your foreign investment journey. This process of opening this account is hassle-free and instant. Once you submit the online application your account with the partner broker will be activated in 2-3 days.

 

• Open an account with stock brokers

 

You can also directly open trading accounts with brokerage firms which will help you invest in the US market. From getting clearance from RBI to open right bank account in the US, these brokers help you to enjoy seamless trading. Once the US stocks account is opened, you are just few clicks away to trade globally.

 

• Investing through new apps

 

Availability of new apps which let you invest in the international share market has also made foreign investments easier. These apps charge only basic account opening fees and there are no limitations of minimum fund requirements. In addition to this, some features let you track your portfolio without any hassle.

 

To sum up you need to scrutinize these factors when you compare the US stock market vs Indian stock market. Do your research thoroughly before you make any foreign investment decision.