Always, Warren Buffett’s one-liner for investors was to “Never bet against America.”
Always, Warren Buffett’s one-liner for investors was to “Never bet against America.” He truly has no excuse because the US Stock Market has continuously created the most innovative and disruptive businesses worldwide.
“Don’t even consider about holding a stock for 10 minutes if you aren’t thinking about owning it for 10 years.” By stating this, Buffett is advising people who are interested in short-term trading to remain with it. Never consider becoming an investor. A long-term investor is a true investor.
The US Stock Market capital market accounts for more than 40% of the global capital market with a combined value of over $100 trillion (stock and bonds). Their capital markets’ breadth and depth are unsurpassed, and a very effective regulatory framework supports them.
I think it is very wise for Indian investors to diversify away from pure Indian market risk and have some investments in the US Stock market.
Open a brokerage account that enables you to purchase US stocks From Us Stock Market to get started. There are a number of options available, including Interactive Brokers, a significant US brokerage firm that provides direct services, Vested, a venture-funded company that offers curated portfolios, and Stockal, to name a few. There are also platforms on the NSE (NSE IFSC) and BSE (India INX) for purchasing foreign stocks, as well as some Indian brokerage firms (like Motilal Oswal), which have partnerships with US counterparts.
Any of these channels will need to be converted into US dollars and fall under the LRS (Liberalized Remittance Scheme) for individual investors, with an annual cap of $250,000, which applies to all transactions. Investors are also not permitted to trade any margin products or derivatives under LRS.
I personally think that non-professional investors should use prudence when dealing with individual stocks while considering investment choices. There are many low-cost passive ETF options available in the US, which are superior possibilities in my opinion. A leading ETF that tracks a large index, such as the NASDAQ 100 or S&P 500, is an excellent place to start. For instance, the SPDR S&P 500 ETF Trust from State Street (Ticker: SPY) has over $350 billion in assets under management and an expense ratio of less than 0.1%.
Some Indian mutual funds, both active and passive, provide indirect exposure to the US as well, but because they are constrained by industry-wide caps, they frequently halt lump-sum investments. Additionally, there are managed funds with their domiciles elsewhere that provide access to the US market via the LRS route. These funds are often intended for HNIs because of their high minimum investment requirements.
There are a number of passive ETFs that provide sector-specific exposure if you have a preference for certain industries. ETFs that invest in disruptive sectors like biotech or electric vehicles are another option. You can also use ETFs that offer exposure to various regions if you want to diversify geographically. For instance, the iShares MSCI China ETF from Blackrock (ticker: MCHI) monitors an index of the biggest Chinese stocks.
The general rule should be that significant organisations like Blackrock, Vanguard, State Street, etc. should typically issue ETFs, and that the AUM and expense ratios should be in a reasonable range. Even for relatively obscure themes, expense ratios for passive ETFs rarely exceed 0.75%.
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