Stockal Global Investing - How to Invest in USA Stocks like Facebook, Google, Alibaba, Apple, Starbucks etc from India?

While Equity Investment is considered as one form of Riskier Investment compared to Fixed Deposits, We have seen that Indians over the past decade has opened up to Equity investments via Mutual Funds. COVID-19 have also made us realized the importance and growth of Technology and how it has enabled millions of Indians and lakhs of Indian companies to continue to operate and function thanks to tools like Microsoft Teams, Slack, Google Hangouts, the very popular Zoom Video. Youtube Streaming (by Google), Netflix and Hotstar (now owned by Disney) continue to remain extremely popular during the Lockdown and have seen unprecented growth in Customer Acquisition while Whatsapp (owned by Facebook), Zoom (New entrant) and Skype have kept families connected in Lockdown. eCommerce is expected to grow massively once Lockdown opens and it will directly benefits like of Amazon, Flipkart (owned by Walmart), Aliexpress etc.

But did you notice or think that while all of us know that Tech is growing annd these tools are seeing massive success in the new "Digital Revolution", You cannot invest in them via BSE/NSE or your Brokers like Sharekhan, Upstox, Zerodha and so on. *How do you participate in their Growth as these tools become the "new normal"?*

Fintech firm Stockal (Headquartered in New York, with its India office in Bangalore) offers global investment platform for Indian investors. This gives single platform to Indian investors looking to invest in multiple global financial markets, starting with the US. Yes, you read it right! You can also enjoy success of these Global Tech companies sitting in India.

We will cover the entire flow for you as I have myself been investing via Stockal for last 6 months.

Stockal has also integrated with HDFC Securities if you prefer to invest via HDFC Securities directly for Global Investing. I personally have used Stockal directly as it would be cheaper to directly deal with them compared to going via HDFC. So for the purpose of this article, I will focus on Stockal (However most things will remain same even if you prefer to go via HDFC Securities website)


How to open an acccount?

Opening an account is actually pretty straight-forward as you would imagine. Simply head over to Stockal Signup and fill in the required personal details.

You will receive an OTP on youe email after which your account is verified.

Stockal Offers 3 Plans for Investment purpose.

• Basic - $2.99 / Trade, No Opening Fees
• Silver - Rs. 3999 per year Fees, $0.99 / Trade
• Gold - Rs. 13,999 per year Subscrption Fees, 1 cent per share

(Use coupon code GLOBAL10 for 10% off*)

Here's some general tips to select the right plan:

* If you are planning to actively trade and have access to capital > 7 Lakhs which you plan to invest in Stockal, Gold plan makes more sense.

* If you are planning to simply invest less than 2 Lakh per year in couple of handpicked companies and forget, Basic plan might makee more sense.

We recommend that starting with Basic plan makes more sense. Upgrading your plan is possible later. You simply email to Stockal and they send back a RazorPay link to pay and upgrade.

It can take around 2 days for account to be approved, after which you can fund your account.

You will also need to give them Picture proof + Address proof (so you need to upload Aadhar Card or Driving license)

Stockal's brokerage account is internally handled by DriveWealth LLC, their US partner for clearing and brokerage services.

Just click on the "Add funds" on Stockal Menu, Enter the amount which you want to send to your Brokerage account. A pre-filled LRS form (more on LRS later) will be presented to you. Verify the information and download the PDF of the form from the website. It's likely that Stockal already has a tie-up with your bank. In my case, they already had tie-up with HDFC Bank. You will need to, either, just sign, scan (or click a pic), and upload it back. Easy instructions will be available alongside the LRS form.

The form looks something like this and given to you by Stockal:

You simply need to sign and ask Stockal to pick up from your home. They will submit to your bank and get the process done.

I simply emailed to my relationship manager in HDFC and the process was done.

Currently, Stockal works with HDFC Bank, Axis Bank, Yes Bank, Kotak Bank, IDFC First Bank and RBL Bank. They already has tie-up with this bank to give good exchange rates. However talking to your relationship manager always makes sense, if you are planning to do a large transfer.

The transfer takes around 3 to 5 business days after which you can start investing.

There is no minimum investment amount that is mandatory. However its recommended to invest atleast Rs. 10,000 or else the fees will really eat up your potential gains. One can invest maximum upto USD 250,000 per year.

There is a $35 fee associated with withdrawals, charged by the US bank, so the cash balance in your account should be at least $35 at the time of placing the withdrawal request. So again you should only invest if you are planning to park your money for a significant amount of time.

One of the unique things about the US Equity markets is that investors can own fractions of stocks. Unlike in countries like India, So you could own 0.05 of Apple stock. DriveWealth (and hence Stockal) allows you to own as low as 0.0001 share of any stock. So don't worry if you dont have $2300 to buy 1 share of Amazon. You can always buy 0.01 share.

The good part is you can build a Good diversified portfolio very quickly with limited Capital but also keep in mind the Fees of Stockal - as it can be 2.99$ per trade on Basic plan. So plan carefully based on capital you plan to invest.

Stockal's US brokerage partner, DriveWealth - a FINRA regulated brokerage firm, works with Electronic Transaction Clearing Inc. (ETC), New York, for the custody of brokerage accounts. So essentially it means that your Stocks are as safe as using broker working with New york Stock Exhange.

Also, US brokerage ecosystem recommends that ever investor account should have insurance.

Stockal's brokerage partner, DriveWealth, is a member of the Securities Investor Protection Corporation (“SIPC”) which currently protects the securities and cash in your Account up to USD500,000 of which USD250,000 may be in cash.

So, yes it does look safe from investment perspective and as per our research. The tie-up with HDFC Securities further strengthen our belief as HDFC would have enough due diligience before opening up to their entire customer-base.

Yes, Just like any Equity investment in Indian Markets, You need to report your earnings, Dividend income etc of Foreign Assets while filing your Income tax in India. You need to report the following:

# Details of foreign assets and income from any source outside India –Schedule FA of the relevant Income Tax Return (ITR)

# Details of Income from outside India (only in the case of resident and ordinarily resident) – Schedule FSI of the relevant ITR

Dividend Tax - Interest received from foreign debt instruments will be subject to tax at normal slab rates for the Individuals and at applicable rates to Body Corporates as Income from Other Sources.

Also do note, All Short-term capital losses arising on sale of foreign listed securities can be set off against both short term and long-term capital gains in India. However, any long term capital loss arising on sale of foreign listed securities can only be set off against long term capital gains in India. (Assuming there is no intraday trading)

So keep this things in mind while filing your returns. We recommend you to talk to your CA, if the above did not make sense

Conclusion:

Overall, We do strongly recommend diversifying your investments in USA markets as you get access to lot of High-Tech and Deep-tech companies which you cannot easily invest in Indian markets (Even if you have the money)

Stockal definitely seems like a good alternative currently. There are also reports of Zerodha soon starting Global investments which we will definitely cover once we have some more information.

Happy Investing! Happy Savings!