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A lot of investors wonder how to invest in US Stocks from India. At the same time, there are others who ask if it’s better to invest in India or if they should consider US markets. While investing in US stocks and funds makes sense for some of us, many may be happier investing in India alone.
Whether you choose to invest in Indian markets or international stocks and funds there are a few things to keep in mind. The decision to pick either or both depends on factors like the amount of money you can invest, the time horizon you’re looking at and the risk you’re willing to take among other things.
In India, your bank interest rates can be as high as 8% depending on various factors. In the US, however, interest rates are much lower. The account you use to invest money from will earn higher interest in India – though you still have to weigh in other factors
The US market is heavily regulated and understandably aids US citizens more than international investors. In India, you will be more cued into regulatory changes and are less likely to miss important finance news items
Converting currency from INR to USD and then back will not be free of cost. So while you may earn in dollars you can never entirely account for what the conversion rates will be when you move your money
India being a developing market has a lot more scope for growth than more mature markets. This can be a deciding factor for investors who already have funds abroad as well
It is easier to liquidate your funds whenever you need the money if you’ve invested in the Indian stock market. This, of course, depends on the type of investment you’ve invested in
Watch this episode of The Cube Wealth Show, where we discuss how to start investing in mutual funds.
Investing in US stocks and funds can help if you ever plan to live in America, have family there or plan to send your children there to study. You participate in a mature economy and also earn interest in dollars
Investing in the US helps you protect your wealth from the rise of the US Dollar which has appreciated by ~5% on an annualised basis. This way you can ensure your wealth does not get eroded even if the rupee falls.
U.S based companies such as Facebook, Google, Amazon, Nike, etc are names you trust and brand you understand. You will, therefore, be able to become a small part of their growth.
America’s GDP is 10 times as much as India’s and US-listed companies account for almost 35% – 40% of the world’s market capitalization. By diversifying your portfolio there you can create a well-rounded portfolio.
The US market has historically outperformed the Indian stock market. Based on that alone, many find it more encouraging to invest in the US.
You can read about the benefits of investing in the US stock market in detail as well.
*Data as on 14 Feb 2020 Source: Bloomberg, Capitaline
*Data as on 31 Jan 2020. Source: Index factsheets
Mutual funds are a pool of money collected from several investors. A fund manager decides where to invest this pool of money and may choose to buy equity or debt securities.
Gone are the days when investors preferred traditional assets like bank Fixed Deposits and Recurring Deposits. Modern equity-linked assets like mutual funds and stocks are becoming popular due to the concrete benefits that they offer.
In India, the Average Assets Under Management (AAUM) of mutual funds for January 2021 was approximately ₹31,84,329 crore. Mutual funds offer better returns and higher liquidity than traditional assets.
Moreover, investment apps like Cube allow you to invest in various mutual funds based on your risk profile:
1. Debt funds
2. Equity funds
3. International & global funds
4. Liquid funds
5. Arbitrage funds
6, Ultra short term funds
7. Overnight funds
8. Small-cap funds
9. Mid-cap funds
10. Large-cap funds
11. Index funds
The Indian stock market has been growing steadily over the past 2 decades. It has emerged as a marketplace for high growth Indian companies that can deliver potentially lucrative returns over 3-5 years.
1. Potentially high returns
2. High liquidity
3. Passive income
Moreover, there are 5000+ stocks on the Indian market that is a mix of iconic companies, reliable organizations, and budding companies that are aiming to be future world leaders.
Peer-to-peer lending (P2P lending) falls under the alternative assets category. In P2P lending, you become the bank -- the P2P lending platform puts lenders directly in touch with potential borrowers.
1. Risk-based lending options
2. Recurring monthly interest
3. Low investment amount
It's also worth mentioning that RBI Certified P2P NBFCs like Faircent and LiquiLoans have been known to generate 2-3x better returns than FDs.
Investing in US stocks can be beneficial for two reasons:
The US Dollar’s value rarely fluctuates and has always been higher than the value of the INR. Furthermore, indices like the S&P 500, Dow Jones, and Nasdaq host the biggest companies in the world (in terms of market capitalization).
Thus, you can create a long term nest egg by creating a portfolio of high growth US companies like Apple, Amazon, Google, Microsoft, and others.
Stocks and ETFs aren't the only way to invest in the USA. You can even invest in international mutual funds that are available in India. These mutual funds invest in US indices like the S&P 500 or other US mutual funds.
Here are some Tips For Investing In US Equities!
Watch this episode of The Cube Wealth Show, where we discuss investing in US stocks from India.
I made my first investment at age eleven. I was wasting my life until then. - Warren Buffet
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