5 Reasons to invest in the U.S. stock market
Transcript
Hi, this is Viram from Vested, and today we are going to be talking about why you should be investing in the U.S. stock market.
We at Vested strongly believe that international investing is a need rather than a choice in today’s age. And here are the top five reasons why:
Diversification standpoint
The first reason is purely from a diversification standpoint. There are four main pillars of diversification: There’s Asset-based, time-based, Industry-based, and Geography-based.The fourth pillar which is geography-based diversification is missing from the majority of our portfolios. This kind of diversification allows you to move away from single country or single currency risk.
Largest stock market in the world
Secondly, The U.S. market is the largest stock market in the world! It controls 56% of the global market cap and the NYSE and Nasdaq together are $ 42 trillion in market cap. This large market gives a lot of different optionalities in terms of investments and also provides tons of liquidity.
U.S. market has outperformed Indian market
Third, from a return standpoint, the U.S. stock market has actually outperformed the Indian stock market over the last 10 years.
Say for example, you had invested INR 10,000 in the Sensex as well as the S&P 500 10 years ago, today that INR 10,000would be worth INR 28,000 in the Sensex whereas it would be worth INR 37,000 in S&P 500.
That doesn’t seem that big a difference right? But actually, these are both different currencies.
The Sensex is in rupee whereas the S&P 500 is in dollars. Now, if you bring them both in the same currency, that 10,000 that you invested in the Sensex would actually be worth only INR 17,000 whereas the investment in the S&P 500 would stay the same.
Why? Because the rupee has actually depreciated by 63% over the last 10 years as it has moved from 45 rupees for one dollar to now close to about 72 to 73 rupees per dollar.
Access to global brands
Fourth, is access to companies that are available in the U.S. Now we all know global brands like Apple, Facebook, Google, Nike, Starbucks all of those are available on the U.S. stock markets. But along with these companies also what is available to invest in is companies that are working at the cutting edge in their field, fields that are going to grow over the next few years. Such as Artificial Intelligence, CRISPR in healthcare, cloud computing, electric vehicles. All of these sectors have amazing companies that are up and coming and are available in the U.S. public markets for one to invest in.
Fulfil your aspirational goals
Lastly, we are all aspirational. We all have global ambitions like studying abroad, living abroad or even traveling abroad. So why not save in the same currency to ensure that you don’t take any currency risk.