Now a days more and more Indian investors are looking at investing in foreign companies. Investors are looking at diversification beyond asset class and across geographies. Apart from high valuation and growth being rewarded by multi-billionaire stocks on Wall Street to its shareholders, investment in foreign stocks is also helpful to mitigate the risk when Indian market crash.
While it is possible to invest in the US from India, one should note that there are high fees associated with brokerages that allow you to do so as these are charged in US dollars. RBI's notification in the Liberalised Remittance Scheme (LRS) allows Indian resident individual to invest only up to $250,000 (around Rs 2 crore) overseas per year without any special permission.
If you wish to invest in American companies like Tesla to take advantage of their substantial growth, here are a few ways to do it:
1. Open an account with Indian Brokerage firm who has a tie-up with foreign broker. Like ICICIdirect, HDFC sec, Reliance Money etc. They provide the service where you can open your overseas trading account with their foreign brokerage partner.
2. Open account with foreign brokers. Some international brokers are out there who permits Indian citizen to open account and trade in US market like Interactive Brokers, TD Ameritrade, Charles Schwab International Account. However, the account may come with heavy maintenance charges and minimum deposit requirements.
3. Buy Indian MF (Mutual Fund)/ETF (Exchange Traded fund) with global equities. Mutual Fund basically invests in stock market, Government bonds and other securities. There are few firms which invest in international market. One can invest indirectly there but the investor will never know if his money went in Tesla or not. However, this is probably the safest option because then the investor will not have to open an overseas trading account plus, he will save the minimum deposit which is roughly about $10,000. Few popular mutual funds who trade in global market are Motilal Oswal S&P 500 Index Fund, ICICI Pru US Bluechip Equity, Motilal Oswal NASDAQ 100 ETF, invest in US stocks. With Tesla's inclusion in the S&P 500 Index, you can invest in the stock indirectly through mutual funds that are linked to the index.
Tesla shares as the stock is expected to see unprecedented activity ahead of its entry into the S&P 500 index on Monday. With a dramatic surge of 700% in the last one year, Tesla is the most valuable company to be ever added to the American index. With roughly 80% of shares of the company available for trade, Tesla is expected to make for 1.5% weightage in the index.
