As you all know we have launched the much awaited, much demanded and very interesting investing option for all of you i.e INTERNATIONAL STOCKS. So I wanted to write to you directly to talk about this new service and why and how to get started.
With this new service you can now invest not just in shares listed on Indian stock exchanges but also in the US stock markets. With our international investing you can own global companies like Apple, tesla, amazon, etc. We are one of the first Indian brokers to offer this service to our clients. Investing in US stocks as an option existed before but it was tedious and involved a lot of paperwork. At 5paisa we always believed in providing investing solutions which can be done end to end digitally and at the lowest cost. I am glad to announce that we have achieved the same wrt international investing too. We have tied-up with a US based advisory firm called Vested Finance Inc. With this tie-up we provide an online, seamless experience for all our customers to invest in the US stocks. What’s more? Investing through us is absolutely FREE. We are the first broker to NOT charge a penny in Fees or brokerage for executing trades.
Why invest in US Stocks?
Stock market returns are directly linked to corporate earnings and they inturn are linked to GDP growth with adjusted inflation. From 2000 – 2010 US GDP grew in the range of 2% - 3% with couple of years of zero to negative growth (During 2008 US meltdown). Stock Market returns then for 10 years was practically flat to negative. India’s GDP on other hand grew around 7% - 7.5% and stock market returns (Nifty) was around 14% CAGR. When our stocks are giving 14% returns and US negative then why would someone invest in US markets? Absolutely right. That’s why we saw huge FII inflow in Indian stock markets between 2000 to 2010. But things changed in the next decade. A revolution which was in the making for the 1st decade of the century started fructifying. The technology revolution which gave world companies like Google, Facebook, Apple, Amazon dominated world and changed the landscape. This was further boosted with Internet penetration not just in US but emerging and highly populated Asian countries like India. That’s why despite US GDP growth remained same between 2010 – 2020 these companies grew by leaps and bounds. A result of their success was reflected in US stock markets. NASDAQ composite gave CAGR return of almost 16% from 2010 – 2015 and 18.68% in 2015- 2020. Not just that but in last 5 months where the entire world is suffering because of pandemic NASDAQ grew by 80% from march bottom. If you compare the same with Indian stock markets then NIFTY gave a CAGR returns of just 7.77% in last 5 years completely underperforming US markets. Apple became the 1st US Company to hit market capitalization of ₹2 Trillion. Companies like Apple, Tesla, Netflix and Amazon have given CAGR returns of 34%, 52%, 38% and 45% respectively in last 5 years. These are tremendous returns by any standards.
Millennials think Global
Today names like amazon, apple, Netflix, Tesla, facebook have become household names for us. Millennials today watch Netflix more than they see Indian OTT channels, aspire to buy an apple phone as compared to any Indian brand (Actually there is hardly any Indian company in mobile phones), book hotel reservations from Airbnb, use facebook, instagram and whatsapp for their social interactions and practically live on Google for everything else. So if we all use these then why not own shares of these companies as an investment option?
How to invest in US Stocks?
Under Liberalized remittance scheme (LRS) of RBI a resident Indian can invest upto $2,50,000 (₹1.87Cr) p.a. overseas. To invest in US stocks you need to follow a very simple process. You will have to open a trading account with our partner Vested by providing just 2 documents i.e. Pan Card and Address proof (We will soon be removing this formality also). It takes just 2 -3 working days to open your account. Once your account is opened you can transfer funds to our US based bank account and transact. If you are an ICICI Bank customer then you can do the same online but for other banks you have to manually instruct your bank to make funds transfer. I have helped with the detailed steps at the end of this announcement to understand how to get started.
Once you are operationally active, the next question is where to invest? We have also solved this question by providing advisory service on our international investing platform. We provide portfolios to invest called as “VESTS”. You can subscribe for these services and buy good quality recommended stocks. Not just that, you also have an option of buying fractional shares. Yes, that’s possible in US. For eg: 1 share of Amazon is $3285. But you can buy and own just 0.25 shares of amazon by paying just $825 i.e. ₹62000.
My Final Take
I personally feel that investing is US stocks is a great opportunity. As an investor you should not shift your entire investment to these stocks but you can start by having 5% - 10% of investment in these stocks as diversification. I would also like to reiterate that we are making investing even more simple and cheaper by not charging any fees or brokerage. Investing in US stocks is absolutely FREE for all our customers. So give it a try and own these global companies.
To grab this investment opportunity, you may follow the following steps:
2) Login with your 5paisa credentials
3) Complete your vested account opening.
4) Fund your account
5) Search any stock you want to invest in or pick from your Watchlist