Invest in US Stocks from India: Global Investing
  • by RingMoney
  • 3 min read
Why should we invest in global stocks and funds ?

Nothing appears out of reach in today's society, thanks to increased globalization and interconnectivity. We have the ability to purchase and sell from and to the farthest reaches of the planet. The tendency of investors to invest the majority of their portfolio in domestic equities is known as home bias. Investors frequently overlook the advantages of diversifying into foreign shares and are wary of foreign markets due to their unfamiliarity. Global markets are home to global corporations with the scale, customer base, network effect, and competitive moat that only a few Indian enterprises will be able to achieve in the near future. US investing is synonymous with the popular FAANG (Facebook, Apple, Amazon, Netflix and Google) stocks and this leads us to the thought how and why Global Investments become beneficial for our portfolio.

Here are 5 reasons significant enough to consider Global Investing
1. Indians are increasingly investing in global markets

Because of the diversity , the benefits of portfolio diversification, seasoned Indian Investor is increasingly diversifying their equity portfolios by investing in exchange-traded funds, stock and other investment instruments available in the US stock market. Assets in Exchange Traded Funds (ETFs) on the brokerage's platform increased by 325% in the last six months, compared to 185% for stocks.

2. Diversification

Diversification is a risk-reduction strategy that involves spreading investments among a variety of financial instruments, industries, and other categories. Although diversification does not provide guarantee against loss, most investing professionals agree that it is one of the crucial components of achieving long-term financial goals while limiting risk. However, we need to be mindful that risk can never be completely avoided. Individual stock risks can be reduced, but overall market risks influence practically every investment instrument, therefore diversification across asset classes and geographies is also crucial and Global Investing provides us with that opportunity.

3. Currency Advantage

Under the Liberalised Remittance Scheme (LRS), resident Indians can acquire shares of both public and unregistered overseas firms or debt instruments, as well as invest in mutual funds/Exchange Traded Funds (ETFs), venture capital funds, and promissory notes. The $250,000 limit per financial year (FY) comprises remittances for both current and capital account transactions, according to the RBI. Compared to the US dollar, the INR has depreciated by about 6% on average. In the long run, investors don't just get return from foreign equity investment but also gained due to depreciation. With the Rupee depreciating at average rate of 6% on average in year 2020-21, Indian investors who held US stocks or US assets in the past two decades have seen their portfolios outperform purely domestic portfolios by a similar margin.

4. Investing in the New Age / New Innovation

In 2020-21, the most popular stocks among investors worldwide were Tesla, Apple, Amazon, Microsoft, Nikola, Nio, Facebook, AMD, Netflix, and Berkshire Hathaway. Most of which belong to new age innovative products portfolios and are market leaders or have a potential to grab a market leading position in coming years and thus provide an effective means to attain supernormal returns on our investments.

5. Money can be saved for future expenses such as a child's schooling or a vacation in abroad

Equity investing is riskier than fixed deposits, but they have the potential to provide consistent long term returns to keep you on track to meet your objectives. If you want to pay your children's education in the long run, you'll need to think about it sooner rather than later. Investing in Exchange Traded Funds (ETFs) for you children’s education could provide returns that keep pace with inflation.

Summing It up

If you have not invested outside India, we strongly advise you to deploy a portion of your portfolio to global markets. Global Markets handles all sales and trading activities on the primary and secondary markets (rates, credit, foreign exchange, fixed-income, securitisation and treasury) for products designed for corporates, financial institutions and large issuers. It facilitate client transactions in fixed income, equity, currency and commodity products. The markets in the united states could be an excellent place to start, followed by Europe and Asia.