
The US stock market, with a $55 trillion market cap (2024), is home to giants like Apple, Microsoft, Amazon, and Tesla. Its high liquidity and diverse investment options make it a prime choice for global investors. Major exchanges like the NYSE and NASDAQ offer access to some of the world’s most influential companies.
You can invest in US stocks from India through two main routes: mutual funds or direct stock investments. Both provide exposure to this dynamic economy but differ in benefits and considerations. Ready to explore? Let’s dive into these options and find what suits your investment goals!
Mutual funds: Let the experts work for you
Mutual funds pool money from multiple investors to buy a diverse portfolio of stocks, bonds, and other securities. In the case of US-focused mutual funds, also known as international or global funds, fund managers strategically invest in US-based companies.
Advantages of mutual funds
Expert management
Not every investor has the time or expertise to track the stock market. Mutual funds are managed by experienced professionals with access to in-depth research, advanced analytical tools, and global resources. These experts carefully analyse market trends, industries, and individual companies to select investments and rebalance the portfolio as needed to meet the fund's objectives.
Diversification
Mutual funds offer inbuilt diversification. This means even if you invest small amounts, you get exposure to multiple US companies and minimise the risks associated with individual company performance. With such diversification, your portfolio becomes more balanced and resilient.
High liquidity
You can quickly redeem (liquidate) units of open-ended mutual fund schemes to meet your financial needs on any business day when the stock markets or banks are operational. This provides convenient access to your money. Once you redeem, the amount is usually credited to your bank account within one to three or four days.
Start with as low as ₹100 or $1
You can invest in US stocks from India with as little as ₹100 or $1. Mutual funds offer this low entry point through Systematic Investment Plans (SIPs). Simply select a US-focused mutual fund on a trusted investment app, set up an SIP, and automate your payments on a date that suits you. This method supports hassle-free, disciplined investment in renowned companies like Apple, Netflix, Spotify, and Amazon.
Direct stocks: A more active approach
Stocks represent ownership in a company. When you purchase a stock, you become a part-owner of the company as a shareholder.
Advantages of investing directly in US stocks
Complete control
When you invest directly in US stocks, you have full authority over your portfolio. This means you are the one deciding which companies to invest in, when to buy more shares, and when to sell. Whether you want to focus on high-growth tech stocks or stable dividend-paying companies, the choice is fully yours.
Higher potential returns
Investing money in the right stocks can yield significant profits. Companies like Amazon, Tesla, Netflix, and Apple have demonstrated remarkable growth over the years. By doing thorough research and staying updated on market trends, you can find undervalued opportunities and gain from their growth. It's also important to keep an eye on Tesla share price, as it can provide insights into the performance of the electric vehicle market and broader investment trends.
No recurring fees
There are no ongoing fees (e.g., advisory fees, operational costs, fees, marketing fees, etc). This means you keep more of your returns, which is especially important for long-term growth.
Align investments with goals
Direct stock investing allows you to customise your portfolio to align with specific financial goals and interests. For example, if sustainability is a priority, you can focus on companies advancing renewable energy or green technologies. If you are interested in innovation, you might choose businesses working on cutting-edge technologies like artificial intelligence or biotechnology. This way, you can pursue both your interests and meaningful profits.
Buy fractional shares
Many believe that buying US stocks directly is expensive, but fractional shares have changed this perception. This approach allows you to buy a portion of a stock based on the amount you can afford instead of purchasing an entire share.
For example, if a US stock costs $100 per share and you choose to invest $10, you can own 10% (0.1 shares) of that stock. Your returns or dividends are calculated based on the fraction you own. Many investment apps now offer fractional shares for as little as $1. Such accessibility means you can easily invest in premium stocks like Netflix and achieve diversification even with limited capital.
Note: To invest in stocks listed on US stock exchanges, you must set up a demat account and fulfil the Know Your Customer (KYC) requirements by providing the necessary documentation.
US market opportunities: Deciding between stocks and mutual funds
Both direct stock investments and mutual funds have their place in a well-rounded investment strategy. Direct stocks allow you to focus on specific companies and trends. They offer higher growth potential if you can identify winning stocks, but this approach requires detailed research, market knowledge, time to monitor investments, and the ability to handle stock-specific risks.
Mutual funds combine simplicity, affordability, and diversification. These professionally managed funds invest across sectors and industries to minimise the impact of poor performance by any single US stock. Moreover, SIPs in international mutual funds allow you to start with small amounts and build wealth gradually. If you prefer a more balanced and less intensive investment experience, mutual funds might interest you more.
Whichever route you choose, make sure to follow three golden rules. First, align your investments with your financial goals, risk appetite, and investment timeline. Second, maintain consistency and discipline, such as through SIPs or steady stock strategies. Third, regularly monitor your portfolio but resist overreacting to short-term market fluctuations for long-term growth.
Disclaimer: This content is part of a marketing initiative. No TNIE Group journalists were involved in the creation of this content.