Top 10 trading companies in USA
How can you open your US trading account in less than 15 minutes ?
If you want to buy or sell stocks in the U.S. stock market, this video is for you. Many people have asked me how to buy U.S. stocks, how to sell them, and how to use the stock market. So, I thought it was necessary to make a video on this topic. In this video, I will explain every step required to invest in the U.S. stock market.
The best thing about the stock market is that you can start investing with a very small amount because it has a special feature called "fractional shares." I will also explain what fractional shares are.
For this video, I will use the app that I personally use to show you the complete process. However, you are free to use any other app. I use the ID Money app, which I have been using for the past few years.
If you want to start investing in the U.S. stock market, it is essential to understand that the ID Money app does not buy stocks itself. It acts as a brokerage platform that enables you to buy and sell stocks through another account called DriveWealth. This is similar to how Zerodha or other Demat accounts work in India.
When you create an account on DriveWealth through ID Money, all your stocks are held in that account. This means that neither ID Money holds your money nor your stocks. It is simply an interface that facilitates investments on your behalf.
DriveWealth is a registered brokerage platform authorized by U.S. stock market regulators. This means that even if ID Money shuts down in the future, your stocks and money will remain safe because they are stored in DriveWealth and are protected under U.S. laws.
Documents Required for Investing in U.S. Stocks:
PAN Card – To verify your identity
Risk Profile – To determine how much risk you are willing to take
Address Proof – To verify your residential details
Bank Account Linking – To transfer and withdraw money
How to Transfer Money to DriveWealth
Once you open your account, the next step is to transfer money from your Indian bank account to DriveWealth. To do this, you need to add DriveWealth as a beneficiary.
If your bank is ICICI, HDFC, Kotak, or IDFC First Bank, you can transfer money online. For other banks, you may need to complete physical paperwork.
Under the Liberalized Remittance Scheme (LRS), you can transfer up to $250,000 (~₹1.9 crore) annually for stock trading, education, travel, or other international expenses.
Once the money is transferred, it will be credited to your DriveWealth account within 3 to 5 business days. A unique code must be entered while transferring the money to ensure it is credited to the correct account.
Banks charge certain fees for international transfers. For example, ICICI Bank charges ₹1000 + GST per transfer. Additionally, a currency conversion fee of approximately 1-2% may apply. To avoid frequent charges, it is advisable to transfer a larger amount at once instead of making multiple small transactions.
U.S. Stock Market Trading Hours (Indian Time):
March to November: 7:00 PM – 1:30 AM
November to March: 8:00 PM – 2:30 AM
If the market is closed, you can place an order in advance, and it will be executed once the market opens.
Fractional Shares – Investing with Small Amounts
One of the biggest advantages of the U.S. stock market is fractional shares. This allows you to buy a fraction of a stock instead of purchasing a full share.
For example, if Google (Alphabet Inc.) stock is $1800 (~₹1.5 lakh) per share and you only have ₹18,000, you can buy 1/10th of a Google share. Similarly, when you sell your stocks, you will receive money according to the fraction you own.
Withdrawing Money to India
If you sell your stocks and want to bring your money back to India, the funds will be transferred from DriveWealth to the same Indian bank account that was used for the initial transfer.
A withdrawal fee of $10–$20 may be charged. Therefore, it is better to plan your withdrawals in larger amounts rather than making frequent small withdrawals.
Long-Term Investment Strategy
It is advisable to keep your money invested for as long as possible instead of withdrawing it frequently. If the market falls or you want to invest in new stocks, keeping funds in your account can be beneficial. Ultimately, the goal is to buy good stocks.
What are the largest trading companies in the US?
I personally prefer investing in publicly listed U.S. tech stocks. Additionally, I like investing in ETFs, as they are theme-based and follow a specific investment strategy.
U.S. Stock Market Taxes for Indian Investors
Dividend Tax
If a stock provides a dividend, the taxation process differs in the U.S. and India.
A 25% tax is deducted at the source in the U.S.
If you receive $100 as a dividend, you will get $75 after tax deductions.
When filing income tax in India, you can claim a credit for the tax already paid in the U.S.
Capital Gains Tax. ✔️✔️✔️🖇️🖇️
When you sell a stock and earn a profit, capital gains tax applies.
Short-Term Capital Gains Tax – If you sell a stock within one year, a 20% tax applies.
Long-Term Capital Gains Tax – If you sell a stock after two years, tax is applied based on your income tax slab.
By understanding these steps and strategies, you can easily invest in the U.S. stock market and start with small amounts using fractional shares.