Investing in the US stock markets lets you diversify geographically and also invest in some of the world’s largest companies
We all know the importance of investing in equities to create long-term wealth. When we think of stock markets, we think of the Sensex and the NIFTY. However, in today’s technology-driven world, one can also invest in the US stock markets from India in an easy and convenient manner. In this article, we look at 6 reasons why you should invest in the US stock markets.
1. Diversify geographically
There are four main pillars of diversification- asset-based, industry-based, time-based, and geography-based. While most investors are decent at asset, industry and time diversification, geography-based diversification is missing from portfolios. A geography-based diversification strategy means that all your investments are not concentrated in a single geography. Investing in the US stock markets helps diversify your portfolio. This means that you move away from single country or currency risk.
2. Invest in the largest stock market in the world
The US market is the largest stock market in the world! As of December 2021, the US stock markets represented 54.5% of the global stock market capitalization. The New York Stock Exchange or NYSE, the largest stock market in the world had a capitalization of over $28.2 trillion as of October 2021!
3. Own a share of global companies
Some of the brands we use on a daily basis like Apple, Microsoft, Nike, and Facebook are listed in the US stock markets. Along with these companies, you can also invest in some of the upcoming innovative companies in fields that are going to grow over the next few years such as artificial intelligence, cloud computing, and electric vehicles (Think Tesla). You can get exposure to all these sectors by investing in companies and ETFs listed on the US stock markets.
4. Potential of better returns
Historically, US stock markets have given similar, if not better returns as compared to Indian stock markets. It is also important to understand that your investments in the Indian stock markets are in rupees, while in the US stock markets it is in dollars. You first convert your investments into USD to invest in the US stock markets and then convert it back to INR when you redeem it. When the rupee depreciates against the dollar, returns on your investment in the US stock markets go up. In the last ten years, the rupee has depreciated from about ₹52 for one dollar to about ₹74 per dollar, a deprecation of almost 30%. This effectively adds to your INR returns.
5. Fulfill your aspirational goals
We all have global aspirations of studying abroad (for yourself or your children), traveling abroad, or even living abroad. When you are investing in the US stock markets, your investment is in USD and you can easily save for all these global goals without worrying about currency risk.
6. It is easy and convenient
At Vested Finance, we bring US investing for Indian investors and guide you on the process of how to invest in the US stock market from India. What’s more, the high price of shares should not be a deterrent, you can invest in fractional shares for as little as $1 (Find out more about fractional investing).
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Our team members at Vested may own investments in some of the aforementioned companies/assets. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment or strategy will be suitable or profitable for an investor’s portfolio. Note that past performance is not indicative of future returns. Investing in the stock market carries risk; the value of your investment can go up, or down, returning less than your original investment. Tax laws are subject to change and may vary depending on your circumstances.
This article is meant to be informative and not to be taken as an investment advice, and may contain certain “forward-looking statements,” which may be identified by the use of such words as “believe,” “expect,” “anticipate,” “should,” “planned,” “estimated,” “potential” and other similar terms. Examples of forward-looking statements include, without limitation, estimates with respect to financial condition, market developments, and the success or lack of success of particular investments (and may include such words as “crash” or “collapse”). All are subject to various factors, including, without limitation, general and local economic conditions, changing levels of competition within certain industries and markets, changes in interest rates, changes in legislation or regulation, and other economic, competitive, governmental, regulatory and technological factors that could cause actual results to differ materially from projected results.
This video is meant to be informative and not to be taken as an investment advice and may contain certain “forward-looking statements” which may be identified by the use of such words as “believe”, “expect”, “anticipate”, “should”, “planned”, “estimated”, “potential” and other similar terms. Examples of forward-looking statements include, without limitation, estimates with respect to financial condition, market developments, and the success of or lack of success of particular investments (and may include such words as “crash” or “collapse”.) All are subject to various factors, including, without limitation, general and local economic conditions, changing levels of competition within certain industries and markets, changes in interest rates, changes in legislation or regulation, and other economic, competitive, governmental, regulatory and technological factors that could cause actual results to differ materially from projected results.