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Tata Capital > Blog > Invest in Foreign Stocks

Wealth Services

Invest in Foreign Stocks

Invest in Foreign Stocks

Investing in international stocks can be an excellent way to diversify your portfolio and tap into the growth potential of global markets. Whether you’re eyeing the booming sectors in the U.S. or the promising emerging markets in Asia, there are certain direct ways to invest in foreign equities.

In this article, we’ll explore the various options available to Indian investors looking to invest in international stocks directly. Further, we’ll also leave you with some important points to keep in mind to help you make sound foreign stock investments.

Keep reading to explore how you can broaden your investment horizons and take advantage of opportunities beyond domestic borders.

How to Invest in International Stocks Directly?

Here is how you can invest in international stocks directly:

1. Open an Overseas Trading Account with An Indian Broker

Indian brokers often have an understanding with stockbrokers in other countries, which allows them to facilitate international investments by acting as an intermediary. However, it’s important to note that this can come with certain limitations. Depending on the brokerage firm, you might have to observe certain restrictions regarding investment vehicles or the number of trades you make within a period of time.

Further, the cost of investing can also be high as charges such as currency conversion and brokerage are levied.

2. Open an Overseas Trading Account with a Foreign Broker

The other direct way to invest in international stocks is to open a trading account with a foreign broker operating in India. International brokers with a presence in India include Ameritrade, Interactive Brokers, and Charles Schwab, to name a few.

Be sure to conduct thorough research, examine all related fees and charges, and compare brokers before opening an account. This will help you find one that suits your investment goals best.

Are There Other Ways You Can Invest in International Stocks?

Yes, there are other ways to invest in international stocks. These include investing in mutual funds, investing in Exchange-Traded Funds (ETFs), and investing through modern trading apps.

How Much Can You Invest in International Stocks?

According to the guidelines released by the Reserve Bank of India (RBI) under the Liberalized Remittance Scheme (LRS), an Indian resident can invest up to $ 2,50,000 (approximately Rs 1.9 Crore) in international stocks per financial year (April to March) without any special permissions.

Points to Keep in Mind When Investing in International Stocks

Here are some points to keep in mind when investing in international stocks:

  1. Opening an overseas trading account and investing in international stocks requires considerable time and effort. Investors also need to have expertise to analyse foreign markets and stay updated on the health of foreign economies to make sound investment decisions.
  2. Investing in international stocks can attract hefty charges such as currency conversion charges, brokerage charges, account charges, etc. Be sure to examine all charges and fees to make informed decisions.
  3. Investors also need to consider applicable taxes in the US and India.
  4. It’s best to start investing in international stocks with a small amount and gain an understanding of foreign markets without financial stress.

Final Thoughts

Investing in international stocks opens a world of opportunities, allowing you to benefit from diverse economic growth and sectoral strengths. You can invest in international stocks directly by opening an overseas trading account with an Indian or a foreign broker.

Remember to stay informed about investment limits and consider the associated risks and benefits. As you venture into global markets, partnering with a trusted financial advisor can make a significant difference.

Tata Capital Wealth provides personalised wealth management services to help you navigate the complexities of investing in the stock market. To learn more about our services and offerings, visit the Tata Capital Wealth website today!

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