Investing in international stocks might sound a little daunting, but actually the process has been made very simple thanks to technology and also innovation on the part of fund houses and trading platforms.
Before we get into how you can go about in international stocks, let us ensure that we are on the same page. Have you considered your risk appetite? Are you aware of the risk involved and are you okay risking this amount of capital given the potential earnings there are to reap? Are you sufficiently knowledgeable on how and when to buy and sell stocks to maximize earnings and minimize losses? Do you have a steady income or some capital saved up that will give you sufficient returns should your international stock market moves be… well… not moves like Jagger?
If you said yes to all of the above, you are truly ready – at least in terms of mindset – to invest in international stocks.
Another important factor – when you are investing in international stocks, you not only need to keep an eye on the fluctuating stock prices but also on the currency exchange rate between your country and the country of the stock in question. For example, imagine an investor who has earned USD 1000 on some trades that he conducted today, when the dollar is valued at Rs 74. The value of his earnings will be very different if the dollar were to plunge to Rs 65 apiece or to Rs 81 apiece. Moral of the story – both stock prices and fluctuating currency rates can seriously have a multiplier effect on your earnings from investing in international stocks. That example pertained to exiting a trade. Similarly, when it comes to entering a trade (or buying stock) – for a stock with a relatively stable price, the investor might want to wait for a day where his rupee will buy him more dollars.
If you are ready to keep an eye on all the moving pieces, to take on risk to earn potentially high rewards and if you want to be part of the success stories of big global corporations, then let us embark on a quick look at the various ways to invest in international stocks
When it comes to buying and selling international stocks, you actually have six options available to you. There are three direct investment routes and three indirect investment routes. In the past, most amateur investors had no choice but to go with indirect investment routes because there were only two direct routes and both were expensive as well as tricky.
Let us begin with the three methods of direct investment, starting with the pre-existing ones. This will also depict to you how the newest option is especially relevant and useful in these times.
Direct investment method # 1: Open an international trading account
Some institutions such as Vested Finance offer investors the option of buying and selling international stocks.
If you go with this type of direct investment option, keep the following pointers in mind
- – Different institutions will have distinct restrictions on things like the number of trades you might be able to do in a day or a year.
- – Similarly, not all types of investment options might be available at the institution you have chosen. Check beforehand that what you seek is available.
- – Understand the fees, charges and the fee structure. In some cases you might notice a bubble advertising no account opening fee, and that might indeed be the case but there will still be annual maintenance charges and maybe even other charges and commissions.
- – Also always verify the company that you seek to use for your investing.
Direct Investment Option # 2 – Open an account with an international broking firm
You can fairly conveniently open an account with an international broking firm if you are confident and possess the financial resources. You’re sure to face less restrictions on the types of investments and the number of trades you can carry out in a day with this option. However precautions with regards to firm verifications and keeping a check on fees and charges must be taken.
Direct Investment Option # 3 – Just download a trading app on to your phone
If you were beginning to wonder if you could pull off international stock investing at all at this rate, you’re not alone. Remember what we said in the beginning: Until this third option came along, many international stock market investors had no choice but to go the indirect way. Option 3 is very simply app-based buying and selling of international stocks.
Signing up is a piece of cake. All you need to do is download the app (free) onto your smartphone, then go through the KYC process and viola! Within 3 business days, you’re ready to invest.
App based trading is more convenient because it can be conducted anytime and anywhere and because you get real-time updates. In addition, specifically with the Angel One app, users get
Commission free trading, although wiring fees, forex transmission fees and account maintenance charges might be applicable.
Fractional investment, where you pool your capital – to the minimum amount of a single dollar – with other investors in order to buy the shares of giants like Amazon and Google.
Curated, ready made portfolios called Vests, which saves beginner investors the stress and confusion of independent selection.
Indirect investing involves choosing investment options that in turn invest in the stock market – just like how some people might choose mutual funds because they lack confidence or risk appetite to invest in the stock market directly.
Indirect investment method # 1 – Invest in Indian mutual funds that invest in international stocks.
Like with any mutual fund investment, your capital is subject to some risk but is placed in the capable hands of a fund manager who will invest the capital in international stocks. You need to choose funds that have names of other countries.
Indirect investment method # 2 – Invest in FoFs
FoF, which is Fund of Funds, is a type of mutual fund investment. These funds invest in a carefully selected bouquet of Indian and international stocks, bonds, other mutual funds and other asset classes. If your goal is to invest in international stocks, logically you need to identify funds that focus on international stocks, bonds and mutual funds.
Indirect investment method # 3 – Invest in ETFs
Exchange traded funds are sold on the stock market, like stocks but they invest in stocks, bonds and mutual funds, like mutual funds do. To get access to exposure to international stocks you should look at buying ETFs on the Indians stock market that invest in international stocks, bonds and mutual funds.
Pick an investment method that you find easiest from the list here and get started. Always remember, EveryoneCanInvest irrespective of their age, their gender or what job they do. Get your investment dreams kick-started with Angel One.