Foreign brands and companies always seem enticing for shopping or investing. Who wouldn't want to grab a bite of the tech giants, namely Tesla, Google, Facebook, and Apple? Who wouldn’t wish to take their investment portfolio global? said Mr.Ranjit Jha, CEO of Rurash Financials Private Limited while emphasizing why every investor, a seasonal one or a millennial, should invest in International Stock.
“There is no one reason for an investor to invest in foreign markets. To widen the investment horizon, pick a good mix of asset classes, to diversify the investment portfolio are all great reasons to start investing in foreign markets.” he points out.
But why does international investment matter?
“I would first like to add that investing in the international market paves a way to benefit from differences in currencies.” Let me elaborate. The Indian rupee has been consistently depreciating for the past 20-25 years, at an average of 5% every year. An Indian investor can benefit from investment in different currencies when your home/national currency loses a percentage of its value and the foreign currency is performing better. This is the reason, in the last 5-10 years, investing outside India, especially the US, has become very popular, mainly due to the evolving nature of their market, which allows Indian investors to invest easily and help grow wealth.” explains Ranjit. We couldn’t agree more. Different economies or countries go through various market cycles, and by investing in foreign stock, an Indian investor gets a chance to invest in an economy that is doing well.
“Next most crucial reason is diversification. We are all familiar with the saying – never put all your eggs in one basket. But it gets one step further with international investment. For instance, specific foreign markets such as the US are known to exhibit lower volatility than India, and by investing in such markets, Indian investors benefit.” Says Ranjit. Even the risk factor diversifies this way. Investing only in domestic equity shares and mutual funds will expose investors to one type of risk, the Indian equity markets. Whereas by adding some amount of international equity, investors can benefit from diversifying risk.
Another preference among millennials is investing in popular companies, a trend of the sort that’s catching up slowly. Ranjit agrees, “From browsing on Google, enjoying unlimited content on YouTube, from being a fan of Tesla and being the consumers of Apple – these global exposures have a bigger impact on investors. So, people prefer to invest in their favorite companies. And that's possible by investing in international stocks.”
“In the last few years, we have also seen a new asset class called cryptocurrency - which has seen investments from millennial investors. However, there has also been a demand for seasonal investors. So, these trends are going viral and for good,” he adds.
Everything has its pros & cons, and investing in the international market is no different. Ranjit lists out the disadvantages or the cons of foreign investment. “If investors are investing or planning to invest in international funds, it is important to understand foremost how the funds are taxed so that you can calculate the potential post-tax returns. Without correct information or research, investors may not benefit from wealth growth due to heavy taxation.”
“Secondly, the investors should know when to remit their money. They should look at the conversion rate & charges against that. The bank can easily charge up to 2% of their currency conversion, which is a big dent in their investment.”
“Thirdly, if investors are looking to invest through a service provider, they should check the service provider's credibility - be careful about phishing, frauds, etc.” he signs off.
Are you looking at investing in an International Stock or Mutual Fund? Rurash Financials Private Limited offers you a range of International Mutual Funds across geographies.
You can reach out to us to know more, www.rurashfin.com