Is it a good time to enter the (US) stock market?
Good morning everyone, today we are here with Ermal Kopani, KTS Finance CEO, to discuss the advantages of the U.S. stock market at the moment.
Many stock brokerage firms have developed online trading apps that allow investors to invest in the stock markets of foreign nations. This includes the United States of America’s stock market. Yes, you read that correctly. In addition to investing in the Indian stock market, you may also participate in the US stock market.
Why is today a favorable moment for long-term investors rather than simply traders? Ermalkopani said”,
Investing experts would advise you to avoid making wholesale changes to your portfolio strategy based on the anticipation of short-term profits, whether or not such predictions are founded on market history. Regardless of what it has done in the past, the stock market may fall in the short term.
Indeed, many of the correlations Hirsch draws in his study are based on the fact that the US stock market has historically risen. Critics may argue that it is normal for the market to perform well after a protracted period of losses. Stock prices have risen to fresh highs following each down market in history.
That’s kind of the goal if you’re a long-term investor. Even if you’re nervous about locating the precise sweet spot, if you feel the market will continue to climb throughout the decades in which you intend to invest, a moment when stock prices are low is unquestionably a wonderful time to buy.
You also get to add some much-needed diversification to your investment portfolio and have the opportunity to build riches. This post is for you if you want to invest your money in the US stock market.
Here are five critical points by “Ermalkopani” to consider before proceeding with your investing.
- The idea of fractional share ownership
In the Indian stock market, the lowest unit of a firm in which you may invest is one share. This is not the situation with the stock market in the United States. Many significant US corporations have stock prices in the hundreds of thousands of dollars. As a result, ordinary investors may be unable to invest in US equities.
To ensure that individual investors may invest in US corporations, the Securities and Exchange Commission (SEC), the US stock market’s overseer, introduced the notion of fractional ownership of shares.
- The effect of currency exchange
Similarly to how you can only invest in the Indian stock market in terms of the Indian Rupee, you can only invest in US equities in terms of the US Dollar. So, before investing in US equities, the first thing you need to do is convert Indian rupees to US dollars.
- The greatest amount of money that may be invested in a year
The Reserve Bank of India (RBI) implemented the Liberal Remittance Scheme (LRS), which limits the amount of investment or transfer that an Indian person can make outside of India in a calendar year.
And, according to the LRS, the limit for an individual is set at $250,000 per year, after which an Indian citizen will not be authorized to transmit any more money to areas outside the nation unless the authority expressly approves. This $250,000 annual restriction applies to investments in US assets, bank savings, real estate, overseas travel, and school expenditures.
So, if you want to invest in US equities, be sure that your total investment for the fiscal year does not exceed $250,000.
- The influence of taxation
The income and gains from your US stock investments have a number of tax ramifications. And it is critical that you understand them as a prospective investor in the US market. There are two types of taxes that might be imposed: dividend taxes and capital gains taxes.
Your income will now be taxable in India because you are a resident Indian citizen. Furthermore, because you are effectively investing in the US stock market, you will be taxed by the US government. Does this imply you’d have to pay tax twice on the same income?
- The fees connected with a US brokerage account
You can no longer invest in the US stock market using an Indian stock brokerage account. Instead, you’d need to create one with a US stock brokerage firm. Most Indian stock brokers who allow you to invest in US equities do so in collaboration with a US stockbroker.