Revathi is one of very senior analyst I know since last millenium (I know it sounds like once upon time) who is master in tracking Cement, Paper, Chlor Alkalies and Hotel sectors since last 90s in INFAC (then acquired by Crisil and now called Crisil Research). I work with Revathi in INFAC as learnt how to analyse Paper industry from her. Good to see you on VP.
Just one concern on the post, all the members who are looking forward to investing in interenational market, please note that you need to understand strcuture, compliance, taxability, juridiction and finally recouse in case of issue. In the enclosed post, you have covered about cost, but pertinent issue which come to my mind, what happen in case after pruchasing shares from this brockers, some problem like Dalmia things (where fradulently MF units held by Dalmia group with India brocker where fraudulently diverted). I am enclosing article in ET on the subject for everyone’s reference.
Beside high cost and other complication about taxability, timing, disclosure in Indian income tax return, the most important concern in case fraud whom shall one approach? Please consider all the risk involve in the international trading before making any investment in my limited understanding.
Dhiraj, thank you for your kind introduction, but in reality investing is a new paradigm despite having been in research. A wealth of understanding is waiting for me to learn and unlearn in this sphere. Glad to have your association and that of valuepickr.
Yes, international investing has several cost and tax implications which one needs to be aware.
Cost of wiring funds is large, since funds are not linked to a bank account. BTW, HDFC does not allow wire transfer so one needs to use ICICI Bank or SBI/BOB etc
Wiring funds indicates incurring exchange rate costs and processing fees, and hence not workable for smaller transfers of say USD 100. For eg, USD 100 could incur upto Rs 930 in transaction costs (Rs 750 as remittance service charges and Rs 180 as GST costs). The adverse exchange rate is an added cost.
Dividends (post deduction of withholding tax) and capital gains from US companies are charged under ‘other income’ as per your tax slab.
Minimum transaction costs are incurred of USD10/USD 20 per month, subject to fund balance levels in the account. These are adjusted against commission incurred on trades.
On the flip side, opening an overseas account is relatively easy with only scan of PAN and address proof needed and an online application. Funding the account is a slightly more involved process, as mentioned earlier as one ideally needs an active ICICI account (wiring funds from nationalised accounts take longer) and it could take 1-2 working days to transfer.
Yes, there is no demat account for the shares purchased and it is kept in a ‘pooled account’. However, chances of fraud are limited as Interactive Brokers has historically been a large, relatively well-known broker operating across several countries.
Yes, separate disclosure in the Indian Income Tax return is needed . However, this disclosure is part and parcel of whichever ITNS Challan No., one fills
A lot of disruption in the US brokerage industry. Last week Charles Schwab waived off brokerage for online trade. (Off topic. In india, players like icici direct and hdfc still not budging.)
Also, I heard vested now introduced a monthly fee.
Nope it’s free as of now. They first had 3 dollars a month fee but now they waived it off and they are even giving 5 dollars credit to people who sign up. I think this all happened after they got funding.
I opened an account with global investing and have made my first purchase as well. I took some time to transfer the funds but it was a hassle free process.
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.
Does anyone on this forum know how to invest directly in stocks of emerging markets (eg: Sri Lanka, Bangladesh, Pakistan, Malaysia, Vietnam)? Interative Brokers allow me access to price data for these markets, however they don’t allow me to buy/sell stocks in these markets. Any insight will be useful!
