Why International?

I have tried to structure my thoughts in the following 4 points. Let me know your thoughts. 

1. The only reason we invest in Indian equity is because we were born here. Let that sink in. We never made a conscious choice. And it has never been easy or cheap to invest outside India. Indian equity was the only convenient option for us. But now it is neither hard nor costly. You have Motilal Oswal S&P fund which allow you to own S&P 500 without any money lost in forex markup or 'transaction fees'

2. India is just 3% of world's GDP. Investing in India is very much like being a frog inside a well. India’s largest company by market cap, Reliance Industries, would be #74 in a list of US companies.

3. Correlation between Nifty 50 and S&P 500 long term returns is actually negative. Hence investing in S&P 500 gives you good diversification. You also get extra benefit from USD INR currency movement. 

4. Look at the S&P 500 list of companies and then look at Nifty 50 list of companies. Which companies will you choose? Which companies do you use on a regular basis? Which companies do you want to bet your money on?

Comments

Post a Comment

Popular posts from this blog

How do I get SGBs at the best price?

This is at the bottom of the post.. first few basics.   =================================  What is SGB?  Sovereign Gold Bond is issued by GOI to encourage people to hold gold in paper form.  They pay 2.5% interest (taxable). Capital Gains at maturity is tax free. You can buy them in the following two ways  1. Primary Market  Government issues SGB in lots from time to time. To know the dates for the next tranche, you can refer to this RBI site. This is the most popular method to buy SGBs. Most banks and brokers support it. Prevailing price as per ibjarates.com will be used. You can give them back to the government at prevailing prices after 5yrs. Bonds will automatically mature after 8yrs. You can sell them in secondary market too, but the price can be at a discount to prevailing rates (& you will need to pay taxes)  2. Secondary market  People can buy sell these bonds to each other just like any other stock. Due to less demand, sometimes the price is lower than prevailing rates.
Read more

What do I like about Debt funds?

There are lots of risks and negatives with debt funds. This post is NOT about that. This post only lists down the reasons that i like about them. Tax deferment You pay tax only when you need the money. If you don't need the money, it stays invested and keeps growing with no tax incidence. With FD, u have to either pay taxes every year or at maturity. You do not have any control Tax reduction Debt funds provide you Long Term Capital Gains benefit which is 20% tax after you apply indexation. This indexation helps to reduce your tax incidence a lot. FD interest is always taxed at slab rate Tax nullification All the income that you make in debt funds are called capital gains. Capital gains can be completely set off by equivalent capital losses in any other equity or debt investments. If managed properly, tax can be completely nullified.  Putting out a calculation. Consider 10L invested for 30yrs with 5% interest. This will generate an income of 33L. With FD, you will have to pay tax on
Read more