All of us use international products and services in our daily life, be it an Apple Iphone, Google, facebook etc. All of these products and services use enormous amount of our time and energy, but wouldn’t it be great to be able to invest in such phenomenal growth stories as well? Stockal in association with Ajmera Globex lets you invest in 3500+ Global companies directly through Stocks, bonds, ETF’s & stacks. Hence, let’s try to understand what international stock market & investing is.
International investing is investing in asset classes outside their domestic (home currency) market. International investing as a concept is relatively new to the Indian investor but it has grown over the last 5 years in terms of understanding and awareness. With the understanding of equity as an asset class, the cult of international investing is all set to grow exponentially hereon in India. While Global stock markets have many parameters & before evaluating other markets, evaluating USA stock markets is more meaningful as it is the world’s largest capital market. The USA stock market has 3 major indices being, Dow Jones (DJIA), NASDAQ & theS&P500 which help track a broad range of stocks from various sectors.
Investing in international asset classes can help you diversify your risk in the portfolio which is concentrated by single country, single currency investing. International investment also acts as a natural hedge to any depreciation in the rupee thereby magnifying returns in the international markets.
International investing allows an investor to invest in global companies of great scale, size and reach such as the likes of technology giants as well as upcoming companies, startups (Venture capital backed) who generally take the preferred route to listing on the NASDAQ as over other stock exchanges. This provides the investor a plethora of companies to choose and invest from.
The RBI through its Liberalised Remittance Scheme (LRS) permits an Indian investor to invest up to $ 250,000 per annum in international stocks. Do note, any other foreign remittances including payments for foreign travel which have been remitted via the LRS scheme need to be factored in the monetary limit. Under LRS, one cannot invest in derivatives or leveraged products.
There are some operational differences in how the USA stock markets work as compared to India. While, India the stocks are held in your own demat account, while in the USA it is held via a third party custodian in the name of the broker. The settlement cycle in the USA is like that of India, i.e. T+2.
International investing offers a good diversification route and investors must consider the same in order to create a strong diversified portfolio. Also, the investors must also keep in mind certain risks and aspects such as global events, currency fluctuation, taxation, RBI guidelines etc, before investing in international markets. Also Read: Investment Guide to Become Rich This Year