USA Stock Trading for Indians

Recently I read a report in RBI that shows the outward remittances by Indians against the RBI policy that allow individuals to send upto USD20000 per annum out of india. This libralized policy has opened International investment options for Indians.

 

Though report talks more about Indian Investors buying Real Estate in UAE & Malaysia but careful analysis show that more then 50% of the investment was in Equity/Debt instruments (while only 20% in Real Estate). But it seemed that reporters were clueless as what is Equity/Debt Investment and hence did not write much about it.

 

It matched my conclusions and I am happy to know that there are several individuals like me who are investing in foreign equity & debt instruments.. Following points will help you understand it.

 

- Many people believe that India is one of the worlds best investment opportunity and Indian mutual funds, real estate and stocks are good enough for their investment planning. This is wrong and not a long term solution to intelligent investing.

 

- Though India is growing fast and there are lot of investment opportunities but still an international investment plan can give higher and better returns in long term compared to Indian invesment options.

 

- Indians can easily open a Trading account in USA (online Trading companies like ETrade, Zecco, Tradeking, Scottrade etc) and Transfer their money to this account and invest online. USA trading accounts give you worldwide investment opportunities ..you can invest in USA as well as international stocks and funds. e.g. I can have a account in USA and can still invest in Major Indian stocks like Reliance, Infosys... etc.. many good Indian companies are listed in US exchanges. Similarly several thousands of companies form Chains, Russia, Europe and almsot all investment friendly countries are listed in US exchanges..

 

- Such a wide basket of international investment options make the US markets best place to invest and manage your financial assets. Amount of content, analysis, help and tools available for US exchanges is much better then Indian. Actually a person experienced with Indian Trading will find USA Trading more user Friendly , easier and quicker.

 

- I recently opened my US trading account with Zecco Trading (Zecco.com) .. this is not a big player but offer some astonishing features. It allow 10 Trades/orders free (no brokrage) per month. This is enough for a investor like me. So it means absolutely Zero Brokerage Trading in US exchanges... There is nothing comparable to this in India. Secondly Account opening fee is also Zero and documentation is negligable. I just has to courier the application form. in india it normally cost Rs.1000/- , lot of followups, documentation and headaces to open an account.

 

- Next it took me just 2 days to send money to their my trading account from my indian acocunt and can withdraw any time quickly. Normally it take mor etime to clear checks in india. SO tiem to transfer and receive money from USA is faster then check clearance time in India.

 

- Their Trading platform use Ajax and i found it much more easier to use then ICICIdirect.. Order placement and processing is quick. portfolio management, watchlists make it very easy to use. Their Stock analysis tools are something I have never seen in India. they are quite advanced and give very good information.. they also have some more advanced tools but at a fee.

 

- Tax: There is almost no Tax on your Earnings thru US stock trading.. In India you have short term and long term capital gains ttax other then STT and what not... You pay No tax at all or transactions and capital gains. (you ahve to fill a IRA form that declate you as a foreign investor and hence not eligible for USA taxes). There might be minor yearly charges like $30 to $50 mentioned for US citizens as IRA fees but I am not sure if it will apply to me..

 

- Hence overall i do absolutely free online Trading in USA , No Account opening fee, No Brokerage, No Capital Gains Tax, No Income tax ( i think foreign earnings are free form tax in india also)

 

- I prefer to trade in ETFs (Exchange Traded Funds) .. Many websites like MSN, yahoo provide detailed comparison of ETFs and many other sites provide investment guidelines.. If you just take Top 10 ETFs in each category and then find your investment targets its simple and easy.. Its just liek investment in Mutual funds but with lower transaction charges and higher liquidity.