While the Indian stock market provides ample long-term growth opportunities to investors, diversifying the portfolio across nations brings in the much-required stability to the stock portfolio over the long term.
As an investor you keep looking for opportunities to grow your wealth. While the Indian stock market provides ample long-term growth opportunities to investors, diversifying the portfolio across nations brings in the much-required stability to the stock portfolio over the long term. On the back of the US Fed infused global liquidity, the market worldwide showed strength largely from April 2020 onwards. Now, the situation is not the same and in the backdrop of rising interest rates and falling liquidity, the economic parameters may take the front seat once again. How the central banks react to rising inflation and how far the impact could be is still an unknown factor. How global economies will get impacted remains to be seen in 2022 and the only way for investors is to be better prepared by remaining diversified.
Taking some exposure in the US stock market may be explored by those who are looking to diversify in international stocks. A low correlation between these two economies of the world can provide a high risk adjusted return over a longer period of investing.
To start investing in US stocks, you need to open an international trading account and have a US bank account abroad. You also have to adhere to the LRS rules of RBI while sending Indian Rupees (INR) abroad. Further, the INR needs to be converted to US dollars (USD) before you buy US stocks listed on US stock exchanges. All these including your KYC formalities can be conducted from here in India through an international brokerage platform operating in India. The US stocks trading account can be opened in a matter of a few days and then buying of stocks or an ETF can begin with a click of a mouse from India.
You may buy individual US stocks such as Apple, Amazon, Google or Facebook or even invest in various ETFs catering to specific sectors or leading US indices. There are ETFs that track Nasdaq 100 and even S&P 500, the two leading US stock market indices in America.
But, if buying US stocks in dollars is a concern espicailly if they are unaffordable, there’s the concept of Fractional Investing to help you build a portfolio of US stocks with an amount as low as Rs 5000. Fractional Ownership is allowed in US stocks and one can start accumulating US shares with an amount as low as Rs 100. Unlike Indian stock exchanges, the price is not a barrier in the US stock market. Simply decide how much you need to invest and the number of shares will be automatically calculated for you.
In addition to giving you the edge to diversify your domestic portfolio, the INR-USD exchange rate also plays in favour of Indian investors. A weaker rupee comes as an added advantage but need not be the only reason to buy US stocks. It’s time to gain from a weaker rupee and reap the benefit in the long term. But, remember, selection of the right US stock or ETF is the key to make full use of international investing.
Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.