Last updated: 22 Sep, 2021 | 02:05 pm
Amazon.com Inc., an American E-commerce giant is among the top companies when it comes to the size of operations and market capitalization. Companies like Amazon are built primarily because of the leaders that quest for the success of their companies, like Jeff Bezos. Achieving a trillion-dollar valuation is not within the reach of everyone, considering it is one of the only six companies in the trillion-dollar club.
Why Invest in Amazon from India?
With a market capitalization of $1.75 Trillion [as of Sept. 2021] and nearing a $2 Trillion valuation, it is no surprise that it has been successful in amassing wealth for its investors. If one is seriously considering investing in the American stock market, then by no means can Amazon be neglected.
Geographical Diversification: When you invest beyond the Indian market, you diversify your investments geographically. It is advisable to diversify your portfolio to reduce your risk. You should invest in diverse asset classes and sectors and, now, you have the option to invest in a different country too!
Rupee Depreciation: The US dollar is one of the strongest currencies internationally, with rare fluctuations. Your investments in the US dollar can help you in long-term wealth creation. The rising dollar and the declining rupee are also a motivation to buy Amazon shares in India. Investments in the US market provide generous and stable returns over the long term.
Share Price Returns: If you had invested Rs 1,00,000 in Amazon 10 years ago [Sept 2011: $239 per share approx.], then you would have Rs 22,45,570 [Sept. 2021: $3462.5 per share approx.]. That’s a gain of 2152% in INR terms within 10 years. If the corresponding annual returns are calculated using the above growth, then Amazon provided 36.5% annually. That’s more than double the index returns!
How to buy Amazon shares in India?
You can invest in Amazon shares directly or indirectly. When you make a direct investment, you would open an account with an international broker and buy the company shares. If you wish to invest indirectly, you could choose a Mutual Fund (MF) or Exchange-Traded Fund (ETF) that invests in global equities.
Ways to Invest in Amazon from India -
1) Mutual Fund
Mutual funds are basically the tool that collects funds from the investors and then further invests it in a gamut of shares and securities. Certain Indian funds are eligible to invest their funds in the American Stock Market. Some of those funds include:
Exchange-Traded Funds are the funds that track any asset, commodity, or index that can be transacted at the stock exchange. The ETFs can be structured to track anything, from a single security to a large portfolio of securities as per the strategies of the fund. There are certain funds available that provide direct investments in US Equities. These are:
3) Direct Investments
Another method is directly investing in Amazon stock. If a company is not listed in Indian stock exchanges, then how to buy Amazon shares in India? Well, to invest in Amazon shares in India is like investing in an Indian listed company with the help of the INDmoney platform. It enables Indian investors to directly invest in the US equity shares directly without having to invest in any fund.
Best ways to invest in Amazon
The next question that comes to mind is what is the best way to buy Amazon shares in India? Three different ways to invest have already been discussed earlier. Now, let’s have a comparative analysis of the same:
The above infographics make it clear that investing directly in Amazon stock via INDmoney not only gives you the maximum returns but also saves on your expenses which acts like getting extra returns over and above the normal returns. Also the problem with investing through the ETF/MF route is that you are unsure what proportion of the money gets invested in Amazon shares. Investing directly allows you to have control over your investment, and you can choose the exact amount you want to invest in the stocks of your choice.
Those investors looking to enter the American stock market may definitely consider Amazon as the best fit. Being one of the FAANG stocks, it contributes significantly to the index returns. Direct investments in Amazon.com are more beneficial than the indirect methods of Mutual funds or ETFs primarily because of the inclusion of other companies in the portfolio that reduces the return of investment.
1) What are the charges of investing directly in Amazon shares through INDmoney?
2) What is the procedure to invest in Amazon?
The procedure is simple. Open a 2 in 1 US account with INDmoney that requires basic documents like KYC, mobile, email, identity proofs, etc. The account takes 1-3 working days to become active, after which you can start investing.
3) Will I have to pay tax both in the US and India?
You will have to pay the capital gains tax only in India. As per the Double Taxation Avoidance Agreement (DTAA) between India and the US, no tax on capital gains gets deducted in the US for Indian residents.
4) What if I cannot afford to buy one full share of a company?
If you cannot buy a complete share, you have the option of buying a fractional share. A fractional share is a part of one share; it is a fraction of the whole share and, hence, its price is also a fraction. You can buy up to 0.00000001 of a share. With INDmoney, you can buy Amazon Inc stock in any dollar value or any other scrip you want.