Ease of Use8.5/10
Features and App Speed6.5/10
- Easy Registration and Onboarding
- Mobile app easy to use
- Customer support is good
- Zero Commission Investing
- No Minimum Balance requirement
- Fund Transfer should be made easier
- Mobile app is Slow and lags at times
- Should be a seperate tab to track individual Stock
- Portfolio Performance be more detailed
The American Dream
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American companies are part of our life and almost 2nd nature to us. They are all around us. America has always been the land of the dream for many Indians. It is also the place where most of the innovations happen. Where entrepreneurship is encouraged and where most Unicorn Startups are born. As Indians, we always wanted to be part of the companies that we use in our daily life. Until a few years ago, it was excruciatingly difficult to do so.
US Stock Exchange has always been an exciting prospect for people around the world and for us Indians. In the 1990s and early 2000s, the only possible way to be part of US Markets was through Mutual Funds like Motilal Oswal NASDAQ 100 or similar ones that would track the US markets. A new bread of Fintech startups is trying to make it easy for us to invest in US stock from India.
But before that, Why should we consider investing in US stocks, you would ask?
Portfolio Diversification Across Geography
The S&P 500 also has almost no correlation with India’s markets, making it an ideal hedge for domestic investors. Most of the companies in Sensex and S&P 500 are not related. Also, most big Multinational companies from around the world are registered with the US Stock exchange. These companies are generally less affected by geopolitics and political turmoil in a particular country. Also, most of these companies do not really depend on India, making them ideal for diversification.
Dow Jones Vs BSE :
Dow Jones(One of the US Exchange), when compared to BSE(Bombay Stock Exchange), has shown better performance for the last 10 years. In the previous decade, the DOW returned 196%, while the SENSEX returned 150%.
Hence, it makes sense to invest in the US Stock (Dow, Nasdaq) from India & will give for better returns than our Sensex.
Fractional Investing / Partial Shares
So are the cost of a single share too costly? E.g.: $TSLA(618.71$ at the time of writing). And would you like to try investing 5$ or 10$ or less on a stock? You are not sure how it’ll perform? Unlike in India, where we have to hold a minimum of 1 share, the US allows investors to buy Partial Shares or, as it is called, Fractional Investing. Fraction Investing is a process where an investor can hold partial shares like 10$ and 20$ worth of a total share of saying Apple or Tesla of the world. This makes investing easy, and you can keep Apple, Amazon and Tesla within your budget.
$ is the Reserve currency of the world. And every year, on average of 10 years, Rupee has depreciated by 5% YOY. Investing in the US market gives more return, as seen above, but the $ also gains an average of 5% every year, giving you better returns on your investment.
In March 2020, at the height of the corona crisis in India’s equity markets lost more than a fifth of their value, while the S&P 500 corrected by just over 11%. Over a decade, the US Index returns are higher and with lesser volatility than the Indian Market. If you ever fear the Bear run here in India. US Market comparatively offers lesser volatility.
Most of the big companies are registered in the USA. Take any field, and you can find the biggest company registered with NASDAQ or DOW Jones. Unlike in India, where the companies are mostly limited to the Indian Ecosystem. The USA attracts the most prominent companies from across the world. Most of the top companies, from oil to technologies, are registered in the US.
- Walmart Inc. (WMT)
- China Petroleum & Chemical Corp. (SNP)
- Amazon.com Inc. (AMZN)
- Apple Inc. (AAPL)
- Tesla (TSLA)
- CVS Health Corp. (CVS)
- Royal Dutch Shell PLC (RDS. A)
- Berkshire Hathaway Inc. (BRK. A)
- Toyota Motor Corp. (TM)
Investing in the US Stock exchange and in these companies gives you access to wealth creation opportunity.
Startup Ecosystem :
Not only are the biggest companies are in the US but also most of the startups and Innovation happens in US Soil. Most of these startups that eventually become successful are primarily listed in the US stock market. Some of the examples of successful listed startups that we regularly use in our daily life are
Airbnb, Netflix, Trivago, Robolox, Palantir, Zoom, Doordash
In India, to register for an IPO, a company has to be profitable for 3 calendar years. Many Startups cant raise IPOs because of this and other rules that make IPOs very difficult for startups. This is a way to safeguard the investors and limit Indian investors chance of investing in Multi Badger startups.
With the world opening and technology removing barriers for entry, we have many companies trying to get a pie of Indian Investors. With Fintech Innovation, companies like Vested have started making it easy for investors to invest in the US. Today we review VESTED Finances, which has made investing in US Stock easy for retail investors.
VESTED – Invest in US Stock
Vested Finance is an SEC Registered Investment Advisor aiming to provide ‘zero commission’ investing in the US markets. It has also partnered with DriveWealth, a US-SEC-registered broker that serves clients in 150 countries and is a Securities Investor Protection Corporation (SIPC) member. It ensures securities in their customers’ accounts up to $500K.
Vested uses 256-bit encryption and Secure Sockets Layer (SSL) to ensure the platform’s security and protect the investor’s personal information. It also employs state-of-the-art login methods, automatic logouts, and ID verification to help prevent unauthorised access.
Vested shows compliance with both US and Indian regulations. As said above, it is SEC-registered. SEC is the US securities market regulator, similar to SEBI in India. In the US, each brokerage account opened with Vested is insured by SIPC (Securities Investor Protection Corporation) up to $500,000. This includes $250,000 in cash.
It is Legal, Under LRS Scheme of RBI to Invest in US Stock Market
Further in India, residents are allowed by RBI to invest up to $250,000 every year towards foreign portfolio investments. This is captured under the RBI’s Liberalised Remittance Scheme (LRS).
Vested Finance offers its Investors an option to keep zero balance accounts and go for fractional share investment. It also provides curated pre-built portfolios ready to be in Vested Finance. These portfolios are curated for investors with various risk profiles.
Zero Brokerage US investing
Now let’s look into the onboarding process.
Initial Login is simple, you create a Login ID (email address) and password, and you are asked to enter a verification code vested sends to your email id. Then, you are directly taken to their home page.
There are 3 steps to complete registration.
For KYC, you require :
- Background Information (Name, Mobile Number, Address, Date of Birth, etc.)
- Proof of ID (PAN Card or Passport)
- Proof of Address (e-Aadhar)
Please make sure e-Aadhar that you can download from Aadhar Website.
Funding your account is the most challenging part as Vested has to ensure that investors are not money laundering. They have a process that has to be carefully followed. Although as a consumer, we would prefer an easier way to do so. Some banks support the Online filling of information for overseas transaction. We found ICICI to be easy to navigate. Below are some of the bank that allows online service for overseas remittance. Prefer to have an account with them. Please note there are charges that bank levy for overseas remittance, and it’s a cost you have to account for.
Your name in the bank and your vested account name should be the same.
Once you are funded, you can start investing in your favourite shares. The Process is simple. You just have to search and click on companies and then order. The order can be for Partial shares of from 5$ to making it easy to test investing in US Stock Market. Markets in the US Opens between (8.00 PM – 1.30 AM) Indian time. You can place a pre-market order which is generally fulfilled the next time market opens.
Pricing & Plans
Vested offers 2 different plan for customers.
If you are looking to invest in ETFs(Exchange Traded Funds) and Direct Stocks only, a basic subscription is good enough for you. ETFs and Stocks are free of any commission. But if you purchase a Vest(Theme based ETF/MF), there is a charge of 3$ every time. Also, if you withdraw, there is a charge of 11$/withdrawal.
Vests are Curated Portfolios for different risk profiles. Dynamic Rebalancing. Research Optimized Allocations.
Allows you 1 free Withdrawal/ year. And the unlimited purchase of Vest commission-free. So if you want to invest in Vest regularly and invest frequently, then premium makes more sense. Else a basic plan is sufficient for most.
Onboarding Process: 8/10
The Dashboard also Shows Multi-Asset class Vests.
Vests are curated portfolios made of stocks and/or ETFs. Vests are constructed with different goals or themes in mind. Some Vests are built to enable investors to invest in diversified core assets that balance performance and downside protection, while other Vests are theme-based, enabling investors to narrowly focus their investments on specific industries or core themes.
Ease of Use: 8.5/10
The Interface in the mobile app is similar to a desktop app that helps make it easy to navigate. But it is slow at times. It has a few niggles, which can be ignored like sometimes it takes time to load. Sometimes the prices are not up to date. Some user feels that there interface lags.
Although we did not find any problems and we could ignore many of these. But in these competitive times, having a great experience in the mobile app should be of paramount importance and something that they should focus on.
Features and App Speed: 6.5/10
Customer support is responsive and guides you through most queries. For our initial problems, they were supportive and were able to resolve most of our queries. Then again we did not make any mistake while remitting money to the foreign account.
Customer Support is an individual experience. Our Experience might not be similar to yours.
Customer Support: 8/10
- The lack of online fund transfer options for major banks like Axis, Citi and SBI, etc., is a huge bummer. While Vested claims to be working on a more straightforward and seamless fund transfer option for its users. It’s kind of a challenging process for now.
- They should have a dedicated page for the watchlist and portfolio, so it is easy to manage and monitor. Currently, we have to use other apps to create a watchlist and monitor stocks.
- Also, every time the app switches, the password needs to be entered again, which is annoying, and they could do away with it.
- The App lags for many users. The App needs some improvement to make it smooth. They can take inspiration from Zerodha and Robinhood to make it more user-friendly, smooth, and informative.
- Better Portfolio performance charts are needed.
Tips to get the best out of Vested :
- Open an ICICI Bank Account. We have found them to be easy for foreign remittance.
- Have the exact same name in Passport, Bank account and Vested account. Or either your account will be rejected, or your transfer would be stuck.
- Be very careful entering details when transferring. Follow the Instruction to the T.
- Download e-Aadhar from Aadhar Website. They require an entire Aadhar front and back with a photo for registration.
Some of the competition of Vested which you can also check are:
So What’s your American Dream?
Further Read :
Section on Startups for more Fintect Startup review : Startups
Article on Peer to Peer Investing : P2P Investing