Want to invest overseas? Here is all you need to know
When it comes to investing, Indians have been restricted to only domestic companies. Experts say they should look at investing overseas as a diversification of their portfolio.
Investing in the time of COVID-19 has laid bare the challenges of having access to limited investment opportunities. Swastik Nigam, Founder and CEO, Winvesta, says, “Home-bias has clearly stung investors in India. Domestic markets are struggling, while the US markets have stayed resilient and are flourishing. Investors are now paying serious attention to overseas markets.”
How much investment can be made overseas?
investors can invest up to $250,000 every year overseas under the RBI’s Liberalized Remittance Scheme. After opening an overseas
brokerage account, investors will be needed to fund it by remitting money from /her
bank account. However, experts say investors need to be wary of currency
conversion and remittance costs charged by their banks. Nigam says, “An
investor is also exposed to currency appreciation or depreciation by investing
overseas, which has historically worked in investors’ favor.”
Who should look at investing overseas?
Accessing overseas markets is not an expensive or complex
proposition anymore, as regulatory and technology changes have democratized
international investing. Fractional shares allow investors with even small
portfolios to invest in expensive stocks like Amazon and Google.
Investors, who are looking for long-term investments, and can
handle volatility should look at investing overseas. Someone with future
overseas expenses such as foreign education, travel, or retirement should also
consider overseas investments to reduce Indian RS. Depreciation risk.
Also, investors who want to add large high-growth stocks to their portfolio
could also consider investing in the US markets.
Who is a Resident Individual for making Investment in Foreign
Company by Indian Individual?
An Indian individual must first come under the definitions of Resident Individual under FEMA to make an investment in a foreign company.
The RBI or Reserve Bank of India has allowed the Resident individuals to make an investment in CCPS of the companies or its equity shares that are incorporated outside India. With regard to subject to certain stipulated conditions, the Resident individuals can make an investment in Overseas Direct Investment.