- 1 year ago
GUIDE to US Stock Market Investing_
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00:00If you want to invest in U.S. stock markets, then in this video I will give you a complete guide to U.S. stock investing.
00:16Friends, U.S. stock investing is a very interesting market to invest in.
00:20And many people have asked what to do, how to transfer money, which stocks to buy, what to sell,
00:28what are the charges, what are the taxes, how to get the money back.
00:31So I thought why not dedicate an entire video on this.
00:35So this is the complete guide to U.S. stock investing.
00:38In this, I will try to answer 6 questions.
00:41Number 1, why should you invest in the U.S. stock market?
00:45What is the Indian market like? Is it bad?
00:47So I will try to hopefully convince you with data that the U.S. stock market is an equally exciting,
00:53in fact, more exciting opportunity to invest.
00:56Number 2, if you want to invest in the U.S. stock market,
00:59then you have to convert your Indian money internationally into U.S. dollars.
01:03What is its process? What are its charges? How can you do it?
01:06We will try to find out.
01:07Number 3, when your money has reached there, then how do you actually go about buying U.S. stocks?
01:12What are the ways? Which stocks should you buy?
01:15Is there an equivalent of stocks or a mutual fund?
01:18We will try to find out.
01:20Number 4, when you have bought stocks, you want to sell them at some point,
01:24then what is the process of selling the U.S. stocks that you own?
01:27Number 5, to do all these things, what are the charges? What are the taxes?
01:31We will try to find out.
01:32And then finally, number 6, when you want to call that money back to India in your bank account,
01:37then what is the process of doing that and what are the charges?
01:40Through these 6 questions, you will be able to know everything that is important for you
01:45to start your U.S. stock investing journey.
01:48First question, why should you invest in the U.S. stock market?
01:52I will start with my facts.
01:53In my entire portfolio, 40% of my investments are in the U.S. stock market.
02:00I started this about 2.5 years ago and I am so happy that I did that
02:04because I have got better returns from the Indian stock market
02:09and I have been able to do it in a manner where it is just as risky or not risky as the Indian stock market.
02:17The volatility is the same, but the growth is better.
02:22And here is how I want you to look at that as well.
02:25So if you want to compare the U.S. and Indian stock markets, then you have to consider 3 things.
02:30First, how is India's stock market performing?
02:33For that, I will take Sensex. Sensex is the best measure of how India's stock market performs.
02:38Second, how does the U.S. stock market perform?
02:41For that, the best measure is what is called the S&P, Standards and Poors Index.
02:46And number 3, which is equally important, how is the conversion rate of USD and INR moving?
02:52Because you convert your money from Rupees to Dollars.
02:56When you bring that money back, it comes back to the exchange rate of that day.
03:01And if that exchange rate has moved, then that also is a factor in your investing journey.
03:06So what did I do? First, I tried to take a graph of 5 years.
03:10To calculate the return of 5 years, I took the date of April 2017.
03:14And Sensex was at Rs. 29,365 5 years ago.
03:21Today, it is at Rs. 60,000.
03:24And that means a return of 101%.
03:27Meaning, it has almost doubled.
03:29S&P, on the other hand, was at Rs. 2,023 5 years ago.
03:34And now it is at Rs. 4,500.
03:37This is the value of the index.
03:39That means that has grown at 91%.
03:42So it is lesser than the Indian stock market.
03:45But if you look at the exchange rate, 5 years ago, USD was at Rs. 65.
03:53Today, it is at Rs. 76.
03:56Meaning, USD has also increased by 17% as compared to the Indian stock market.
04:01So if you had converted your money to Dollars 5 years ago, then you would have done it at Rs. 65.
04:07In today's date, if you convert Dollars back to Indian currency, then you will get it at Rs. 76.
04:12When you calculate all of that,
04:14and you ask yourself that if you had invested Rs. 1 lakh 5 years ago,
04:18then you would have got Rs. 2 lakh in India.
04:22Double, which is not bad at all.
04:2415% annual return for 5 years.
04:27Not bad at all.
04:28But if you had invested the same money in S&P or US stock market,
04:32then you would have got Rs. 2,24,000.
04:34Which is a return of 18%.
04:37Every year.
04:38That is the power of the US stock market.
04:41And the appreciation of the US dollar.
04:43Now, when you do this,
04:45please remember, and this is not about patriotism,
04:49it is something that I want to stress upon.
04:51When you invest in the US stock market in India,
04:55and bring that money back to India,
04:57then the beneficiary of that is India.
05:00Because you are bringing money back into the country.
05:03So what you are doing essentially,
05:05is what in my opinion is the best thing you can do.
05:08You invest in the Indian stock market,
05:10which is something that you should continue to do.
05:12Because in the next 10-20 years,
05:14the growth of the Indian stock market is going to be excellent.
05:16Depending on how the economy works.
05:18But you invest in the US stock market sitting in India.
05:21And when you bring those dollars back into India,
05:23it helps the economy.
05:25So this was the analysis of 5 years.
05:26If you have to do the same thing in 10 years,
05:28then how will you do it?
05:29And here is the answer.
05:3010 years ago, Sensex was around 17,000.
05:33So that means 245% return.
05:35In 10 years, S&P was around 1400.
05:38So 220%.
05:40But in the same 10 years,
05:42the US dollar has increased from 50 to 75,
05:45which is an increase of 47%.
05:47Which means that in the last 10 years,
05:49Sensex has given us around 13% annual return.
05:52And US stock market S&P has given 17% return.
05:55And that's a marked difference in the return.
05:58This is the simple reason
06:00why you should invest in the US stock market.
06:03It is home to the largest brands in the world.
06:06It is home to the most global companies in the world.
06:09And it is financially a better market to be in.
06:13So as I have done,
06:1540% of my investments are in the US.
06:1835% are in India.
06:20And the rest is invested in crypto, startups, etc.
06:26But this is my portfolio.
06:2875% is in stocks.
06:30Almost half of it is in the US and India.
06:34And I would love for you to do that.
06:36To do this,
06:38the whole process used to be very difficult.
06:41There was a lot of paperwork.
06:43And it was very expensive.
06:44But not so much anymore.
06:45So let's come to the second question.
06:47How do you actually move your money
06:49from India to the US?
06:51To invest in the US stock market,
06:53you have to send Indian Rupees to the US
06:56and convert them into US Dollars.
06:58This happens under something called the LRS.
07:01Liberalized Remittance Scheme.
07:04The government says that any Indian citizen
07:07can send $250,000 outside India
07:11in a financial year from April 1st to 31st March.
07:15For whatever purpose they need to.
07:17This can be for education.
07:19So you or your children are going to study abroad.
07:22So for their education.
07:23This can be for investment.
07:25So you are investing in equities.
07:27Whether it is publicly listed,
07:28which is the US stock market,
07:29or privately listed.
07:30If I invest in a startup,
07:32which is US incorporated,
07:33then I have to send money through LRS.
07:35So on and so forth.
07:36So in a year,
07:38you just have to give a declaration.
07:40And the government,
07:42in a liberalized manner,
07:44allows you to send $250,000 or almost Rs 1.8 crore.
07:51Which is a lot of money.
07:52So I don't think most of us will get there.
07:55And this is fairly good for us.
07:58Earlier,
07:59to send money through LRS,
08:01there was a very cumbersome process.
08:03Where you had to go to the bank,
08:05had to declare what to do,
08:07had to fill a lot of documents,
08:09declare forms,
08:11all those things.
08:12And it used to be extremely time consuming and expensive.
08:16First of all,
08:17banks knew that this person is sending US dollars.
08:21He must have money.
08:22So they used to charge a lot of money.
08:24Banks used to charge anywhere between Rs 1,000 to Rs 2,000 for every transfer.
08:28Irrespective of how much quantum you are sending.
08:30So if you are sending $5,000,
08:32he will still charge you Rs 2,000.
08:34If you are sending $1,000,
08:35he will still charge you Rs 2,000.
08:37If you are sending $500,
08:38he will still charge you Rs 2,000.
08:40So it was fairly expensive.
08:41Second,
08:42the exchange rates were not lucrative.
08:45There is usually a massive spread
08:47or a difference between
08:49at what rate you can buy US dollars
08:51and at what rate you can sell US dollars.
08:53So because of these two things,
08:55it was really cumbersome,
08:57time consuming and expensive
08:59to send money outside.
09:00But not anymore.
09:01I use IND money for my US stock market investing.
09:04And I would love to go through this process with you
09:06so that you can learn
09:08how this process is very smooth,
09:10very elegant
09:11and it is no cost at all.
09:14Really.
09:15No charges.
09:16Here is how it happens.
09:17To make this video,
09:18I had already transferred about $400
09:21so that I can show you the whole buying experience.
09:23But if I want to transfer $100,
09:26and the best part is
09:27that you can transfer any amount
09:29because now it is zero cost.
09:31IND money does not charge you any money
09:33to actually make this transfer happen.
09:35So let's say I want to charge
09:37and I want to charge Rs 5,000.
09:40So it very clearly shows.
09:41A GST charge will cost Rs 45.
09:43So that is something you will have to pay.
09:45Total amount we will deposit will be Rs 64.62.
09:49You have got the exchange rate,
09:51which is the best exchange rate you can get.
09:52This exchange rate,
09:53usually what you see on Google,
09:55will be more expensive than that exchange rate.
09:57But that is the buying exchange rate
09:59and this will be true for any
10:01bank experience that you will have.
10:03But here is the best part.
10:04You can see.
10:05Congrats, you are saving Rs 964
10:07on the transfer charges
10:08and forex charges.
10:09So if you do the same thing
10:10from a bank,
10:11then you would have to pay
10:12around Rs 1,000 more
10:13on the Rs 5,000 that you want to do.
10:15Which is obscenely expensive.
10:1720% cost.
10:19So let's say I want to do Rs 65,000.
10:21You will see GST charges are 117.
10:23So it is very less.
10:25And no additional charges.
10:26And now I am saving Rs 2,139.
10:29I transfer now.
10:31What will happen is that
10:32my bank account is already listed.
10:34So my HDFC bank account is there
10:36which is already listed in there.
10:38So I can say yes.
10:39And then all I have to do is
10:41either through UPI
10:42or through Net Banking,
10:43I can make this payment.
10:44So I want to show you that
10:46my previous one,
10:48Rs 390,
10:49I did this on 6th April
10:52at 6.40 pm.
10:55And you will see that
10:57on 7th April at 5.50 pm,
11:00this money was transferred to my account.
11:03What is this account?
11:04This is ISBN.
11:05It is an account of State Bank of Mauritius.
11:07That IND money will open on your behalf
11:10and that will be used for you
11:12to be funding your US bank account
11:15where this money will go.
11:17This is the way that you transfer your money
11:19to the US bank account
11:21to start investing.
11:23Now question number 3.
11:25When your money has reached there,
11:27how do you buy it?
11:28If you want to buy stocks in India,
11:30then you make a brokerage account.
11:32It can be Zerodha,
11:33Grow,
11:34Five Paisa,
11:35so on and so forth.
11:36Now what is its equivalent in the US?
11:38So IND money uses a brokerage company
11:41called Drive Wealth.
11:43Drive Wealth is a very well-established company
11:47which acts as an online brokerage
11:50for all international brokerages.
11:52So you can read as much as you want
11:54about Drive Wealth on Google.
11:56It's a very secure company
11:58and the best part is that
12:00Drive Wealth powers many such online brokerages.
12:03So it's not just with IND money
12:05but its business is to do this
12:07for a lot of other companies.
12:09So when you convert your Indian money
12:11from IND money to US dollar
12:13and send it to the US,
12:15and then you go through the process of buying,
12:17you're actually buying through Drive Wealth.
12:20So all your stocks are in Drive Wealth
12:23and that is the beneficiary of your stocks.
12:26So IND money is only an intermediary
12:29that is giving you a product
12:31to do this whole experience.
12:33It converts your Indian rupees
12:35into US dollars,
12:37buys your stocks through Drive Wealth,
12:40sells those stocks through Drive Wealth
12:42and when you need the money back,
12:44then again from the SBM or State Bank of Mauritius
12:47bank account, your money
12:49comes back to your bank account
12:51which is your personal bank account.
12:53All of that is managed through IND money.
12:56Now the question here is
12:58is my money secure?
13:00What happens if IND money
13:02gets affected in the future?
13:04And there the best part is
13:06Drive Wealth, which is an independent unit,
13:08is buying or selling stocks on your behalf.
13:11So even if IND money gets affected in the future,
13:14your stocks are still secure
13:16because they are with Drive Wealth.
13:18And with Drive Wealth, you can always
13:20sell those stocks and bring your money back to India
13:23because that is your custodian
13:25and that is where your stocks are.
13:27To buy, it is very simple.
13:29So in my account, there are 390 dollars.
13:32If I want to buy,
13:34so I will go and let's say
13:36I want to buy Tesla stocks
13:38because Tesla stocks have fallen by 3%,
13:40so I think it's a good buy.
13:42So when I go to Tesla's page,
13:44I will see all the data that I want
13:46like what is for 1 day, what is for 3 months,
13:48what is for 1 year, so all the details.
13:50I can go and check what are its stats,
13:52so everything that I would really need
13:54to make a purchase
13:57In buy, I will go in there.
13:59Now here's the best part.
14:01In the US stock market,
14:03fractional shares are allowed.
14:05That means, one share of Tesla is worth
14:071025 dollars,
14:09which is around 75,000 rupees.
14:12I only have 400 dollars.
14:14So can I buy a share of Tesla?
14:16If this is the case in the Indian market,
14:18the answer was no, I cannot buy.
14:20But in the US stock market,
14:22fractional shares are allowed.
14:24All I have to do is actually buy
14:26lesser than 1 unit.
14:28I'll show you how that works.
14:30So I want to buy in dollars.
14:32I have 390.
14:34Let's say I will put all of that
14:36into my Tesla.
14:38So 390.07
14:40and I will buy 0.38037426 shares from this.
14:45I will play the buy order
14:48and the order has been placed successfully.
14:51Because the market is not open yet,
14:53the order has been parked.
14:55And when the market opens,
14:57then this order will go through
14:59and I will then be able to
15:02have the order in my dashboard.
15:04If you want to see the transactions,
15:06you will see that Tesla is queued.
15:09So 390.07.
15:11Before that,
15:13I have done a lot of transactions.
15:15Tesla, Alphabet, Cloudfair, Affirm.
15:18These are not recommendations.
15:20So don't buy them without thinking.
15:22These are just stocks that I have bought.
15:24You don't have to buy them.
15:26Please do your own research.
15:27But these are the entries that I have done
15:29in the past.
15:31So this is as simple as it gets.
15:34A one-click purchase which will be true
15:36for any other really good product
15:38and that is how it is seamless.
15:41Now number 4.
15:43If you have bought these stocks
15:45and you want to sell them,
15:47then what is the process of selling?
15:49Let's go through that also.
15:51So to sell, I will go on sell
15:53and I can see
15:55how many stocks I have of Tesla.
15:57So 12.5873
15:59because it is fractional.
16:01And let's say
16:03I want to sell stocks worth $50.
16:05So I will sell
16:070.04875.
16:09Or I can also say that I want to sell
16:11in shares.
16:13So I can say 0.001.
16:15So I want to sell
16:17shares worth $10.
16:19I want to sell 0.01
16:21of Tesla shares.
16:23I place the sell order
16:25and the order is placed successfully.
16:27As soon as the market opens,
16:29as soon as the market opens,
16:31this order will be placed.
16:33Along with my buy order
16:35worth $390.
16:37And I will be a proud
16:39Tesla owner and a proud
16:41Tesla seller
16:43in just one click.
16:45That's the beauty of a seamless product
16:47like this.
16:49A lot of people ask me
16:51what to buy in US stocks.
16:53Because we know to buy Facebook, Alphabet,
16:55Google, Amazon.
16:57The good thing is that all these stocks
16:59can be bought from India.
17:01But there are a lot of really good quality stocks
17:03that are still not allowed in the Indian market
17:05which you can access
17:07like an IND money product.
17:09My suggestion will be the following.
17:11If you already have stocks
17:13that you know and want to buy
17:15and you have researched the potential,
17:17then of course do that.
17:19If not, then buy the equivalent
17:21of mutual funds in the US called ETFs.
17:23ETFs are the equivalent
17:25of mutual funds,
17:27basically a basket of stocks
17:29managed by a portfolio manager.
17:31And they will give you recommendations.
17:33So you will have to buy an ETF.
17:35My simplest recommendation
17:37for an ETF is what's called VOO.
17:39This is an S&P 500
17:41top US companies
17:43and it bets on them.
17:45So if you want to
17:47bet on the US stock market
17:49and you don't want to worry about which stock,
17:51how much, why, then
17:53you buy an S&P 500 ETF.
17:55This is a Vanguard ETF.
17:57V-A-N-G-U-A-R-D
17:59Vanguard S&P 500 ETF.
18:01And this will be the
18:03best way for you to enter.
18:05This will be the best SIP
18:07to also go through.
18:09Because if you want to invest in the US stock market
18:11and you don't want to worry
18:13about which stock, how much, what,
18:15then just come,
18:17buy whatever you want.
18:19100 dollars, 200 dollars,
18:215,000, 10,000, 15,000 rupees,
18:23whatever you can invest.
18:25You can do that.
18:27As you can see, it's free from IND money.
18:29So you don't have to pay anything for it.
18:31Plus you will get into the discipline of riding
18:33on the biggest market that the world has to offer.
18:35Now number 5, to do all these things,
18:37what are the taxes and
18:39charges? First of all,
18:41on IND money,
18:43everything is free.
18:45Buying and selling of stocks is free.
18:47Transferring money is free.
18:49Selling is also free.
18:51The only charge that you have to pay is
18:53when you bring the money back to India,
18:55then you have to pay a withdrawal fee of 5 dollars.
18:57In which case, my suggestion
18:59will be that whenever you want to bring back
19:01the money to India,
19:03please bring it in a bulk amount,
19:05at least 500 dollars.
19:07It represents only 1%
19:09or lesser if you are bringing more than 500 dollars.
19:11Don't bring 100 dollars or 50 dollars
19:13because then those 5 dollars
19:15will be deducted. It will be a meaningful cost
19:17to pay and I wouldn't recommend that.
19:19Keep the money there.
19:21As I said, it is safe and secure
19:23in a third party.
19:25So your money is always going to be
19:27protected and whenever the market
19:29falls or you want to buy again,
19:31you can always use that
19:33and it works. That will be my
19:35recommendation. Apart from this,
19:37taxes are very important to know.
19:39There are two types of taxes in the US stock market.
19:41First, capital gain tax.
19:43There are two types of capital gain tax.
19:45Long term and short term capital gain tax.
19:47If you buy any stock
19:49and sell it within 2 years,
19:51it classifies as short term
19:53capital gain tax.
19:55Whichever profit you earned on it
19:57was for the short term.
19:59You have to pay tax on it in India
20:01as per your income tax
20:03slabs. So whatever your income tax
20:05slab is, you have to pay
20:07tax on it and this
20:09will be something you will have to pay in India
20:11when you are filing your IT return
20:13at the end of the year.
20:15If you buy a stock
20:17and sell it after 2 years,
20:19then that classifies as long term
20:21capital gain tax.
20:23Whichever profit you have earned,
20:25it is for the long term and the tax
20:27on it is 20%
20:29fixed. This is something that
20:31you will again have to pay in India
20:33along with your income tax return.
20:35Good thing about IND money is
20:37at the end of the year,
20:39whatever documents you need,
20:41tax documents, your buying and selling
20:43records, whatever your tax implications are,
20:45all that paperwork is
20:47available for you.
20:49Through your account itself, you don't have to do anything.
20:51You just have to give all those accounts to your CA.
20:53They will know exactly what needs to be done.
20:55You simply have to track
20:57that within 2 years or
20:59outside 2 years, you are selling
21:01to imply that it will be a long term
21:03or short term capital gain tax.
21:05If you get dividends,
21:07then dividends are taxed differently.
21:09Suppose you bought a stock
21:11of Google, a $100 dividend
21:13has been announced,
21:15then the US imposes a
21:1725% dividend tax on it.
21:19Meaning $25 of the $100.
21:21The difference is that
21:23that $25 is retained
21:25in the US.
21:27This is called a withholding tax.
21:29And you will only get
21:31$75 in your account.
21:33Now, is that
21:35$25 lost? No.
21:37This $25 is yours.
21:39It has only been withheld.
21:41Like TDS is withheld in India.
21:43So when you eventually
21:45file your return, then that $25
21:47you can also claim
21:49because there is a treaty
21:51between US and India
21:53around this tax.
21:55In summary, dividend tax
21:57will apply 25%. It will be withheld.
21:59Meaning you will only get 75%
22:01of the dividend that you will get.
22:03But when you file your return,
22:05then that 25% that has been withheld
22:07is yours
22:09and you can claim it
22:11as tax you have already paid.
22:13Exactly like
22:15how TDS works in India.
22:17These are the only
22:19costs that you need
22:21to bear in mind.
22:23Apart from this, there is one more thing
22:25which will hopefully apply
22:27to very few people but is important to know.
22:29If at any point
22:31you transfer more than ₹7 lakh
22:33from India
22:35to the US,
22:37then you have to deposit
22:395% of TDS.
22:41Which means if you are transferring
22:43₹7 lakh,
22:45then your 5%
22:47i.e. ₹35,000 TDS will be deposited separately.
22:49This again will be
22:51something that is yours.
22:53When you file your income tax,
22:55then you can claim this 5%.
22:57But this is a way of the government
22:59to reserve off taxes
23:01that you will eventually be paying.
23:03This is not a cost
23:05but something that you have to bear in mind.
23:07Finally, everything is done.
23:09The money has been made.
23:11Now this money will come back to India.
23:13And as I said, the only cost that you have to bear
23:15which is applicable as of today,
23:17April 2022,
23:19will be reduced.
23:21As we move forward, you will have to pay
23:23$5 irrespective of the amount
23:25that you are transferring back.
23:27So whether it is $100, $500,
23:29or $5000,
23:31you will have to pay $5 as per IND money
23:33to get your money back
23:35directly into your bank account.
23:37That is it.
23:39This is the entire summary of
23:41how you can start your investing journey
23:43in the US stock market.
23:45I would love for you to do that
23:47It is the world's largest market.
23:49It is also something
23:51where you can actually gain
23:53from the depreciation of rupees.
23:55And when you bring
23:57the money back, that money
23:59is only going to help India
24:01because you are paying taxes here.
24:03So you are actually
24:05using your money to make
24:07India rich in a way
24:09by investing in the US
24:11stock market or in the US
24:13large companies. Please do that.
24:15I have used IND money.
24:17You can use any other product
24:19that you like and works for you.
24:21And I hope that the next time
24:23I meet you, you
24:25will be talking about yourself.
24:27Being a proud Google, Amazon,
24:29Facebook, or any
24:31other such brand that you would love,
24:33its stock owners.
24:35On that note, Ankur Warreku
24:37signing off.
24:41My first book, Do Epic Shit,
24:43is now out. I would love
24:45for you to buy a copy of Do Epic Shit
24:47on Amazon.in
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