tamperfinderThe recent rise in Nvidia’s market capitalization, which surpassed Microsoft, may be familiar to regular investors. In 2024 alone, about 150 percent of the goal was accomplished! Many regular investors would have considered investing in Nvidia when the firm was in the headlines. Not only is Nvidia featured in the US, but a lot of other firms on your wish list, such as Apple, Amazon, google, Meta ad etc.
What is the best way to invest in these stocks? Opening a foreign or local broker account is the proper way to start trading overseas. It is not that simple for the average person, as it requires not only the computation of different fees, taxes, conversion rates, etc., but also an in-depth study of investment firms. Furthermore, there are hazards associated with direct investing.
The fact that various nations have different trading hours makes it challenging to keep an eye on the rises and falls in stock prices.
Diverse funds are accessible that allocate their investments to foreign stocks. Investing in these funds is similar to investing in a traditional mutual fund. This category includes mutual funds, fund of funds, and exchange-traded funds (ETFs). Fund of funds invest in mutual funds and ETFs that invest in foreign markets. ETF purchases and sales are made using a demat account, much like stock purchases. Different ETFs that invest in overseas companies are available in the nation. For novice investors who wish to purchase overseas equities, these funds are the ideal option. They are available to those who lack the expertise to make direct stock investments.
Who can invest?
Anyone who wants to diversify their investment into foreign stocks can choose funds that invest in international markets. The key advantages are geographic diversification and the opportunity to invest in globally recognized companies. At the same time, new investors do not need to invest in foreign markets immediately. After making sufficient investments in the domestic market, it is better to consider international markets with a view to portfolio diversification.
Funds that invest in the stock markets of countries such as the US, European countries, China, Japan, Taiwan, and Brazil are available here. But investing in foreign markets alone does not necessarily yield attractive returns. This is because there are many funds in this category that have given negative returns in the last three years. Investments in the US market are generally profitable. If funds are not selected and monitored carefully, expected gains may not be achieved and large losses may occur.
Tax on gain on foreign investment
The investment method and operation are similar to that of ordinary mutual funds, but similar to tax and debt funds. If the funds are sold within three years, the tax can be considered as short-term and taxed according to the slab. If the investment is sold after three years, the gain is treated as long term. Tax on long term gain is 20% after indexation. International ETFs are taxed similarly to these funds.
There are more than 50 funds available in India that invest in international markets. But most of them do not perform attractively in the long run. Funds/ETFs that have returned at least 10% over a period of three years can be considered. It can be seen that most of the funds invest in Nvidia. Among the foreign funds, index funds can also be considered.
Three years return of Mirae Asset NYSE-Fang, Kotak Pioneer Fund, DSP Natural Resources and New Energy fund have shown more than 20% return in three years, followed by Motilal Oswal Nasdaq funds. But it’s more important to choose what to invest in than which fund to use. This is known as financial goal setting. That objective might be anything. The completion time might range from three to thirty years. Buying a car, house construction, overseas study of children, and so on are a few examples.
Experienced investors can have foreign stocks and investments also in their portfolio. Global investment is not suitable for beginners.
None of the above is a recommendation to buy or sell any stock or mutual fund. It is for information only. Investments should be made following the advice of SEBI approved advisors, because all this can lead to financial loss.
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