Is It Better To Invest In India Or the USA?

A lot of investors wonder how to invest in US Stocks from India. At the same time, there are others who ask if it’s better to invest in India or if they should consider US markets. While investing in US stocks and funds makes sense for some of us, many may be happier investing in India alone.

Whether you choose to invest in Indian markets or international stocks and funds there are a few things to keep in mind. The decision to pick either or both depends on factors like the amount of money you can invest, the time horizon you’re looking at and the risk you’re willing to take among other things.

Benefits of Investing in India

1) Bank Interest Rates

In India, your bank interest rates can be as high as 8% depending on various factors. In the US, however, interest rates are much lower. The account you use to invest money from will earn higher interest in India – though you still have to weigh in other factors

2) Regulatory Policies

The US market is heavily regulated and understandably aids US citizens more than international investors. In India, you will be more cued into regulatory changes and are less likely to miss important finance news items

3) Conversion Loss

Converting currency from INR to USD and then back will not be free of cost. So while you may earn in dollars you can never entirely account for what the conversion rates will be when you move your money

4) Scope For Growth

India being a developing market has a lot more scope for growth than more mature markets. This can be a deciding factor for investors who already have funds abroad as well

5) Easy Liquidity

It is easier to liquidate your funds whenever you need the money if you’ve invested in the Indian stock market. This, of course, depends on the type of investment you’ve invested in

Benefits of Investing in the US Stock Market

1) Create a Nest Egg

Investing in US stocks and funds can help if you ever plan to live in America, have family there or plan to send your children there to study.  You participate in a mature economy and also earn interest in dollars

2) Hedge Against the Rising Dollar

Investing in the US helps you protect your wealth from the rise of the US Dollar which has appreciated by ~5% on an annualised basis. This way you can ensure your wealth does not get eroded even if the rupee falls. You should, of course, speak to Cube Wealth Coach to get a deeper understanding of this.

3) Invest in Popular Companies

U.S based companies such as Facebook, Google, Amazon, Nike, etc are names you trust and brand you understand. You will, therefore, be able to become a small part of their growth

4) Geographical Diversification

America’s GDP is 10 times as much as India’s and US-listed companies account for almost 35% – 40% of the world’s market capitalization. By diversifying your portfolio there you can create a well-rounded portfolio

5) Historical Performance

The US markets have historically outperformed the Indian stock markets. Based on that alone, many find it more encouraging to invest in the US.

You can read about the benefits of investing in the US stock market in detail as well.

US Stock Market vs India Stock Market Graph
*Data as on 14 Feb 2020 Source: Bloomberg, Capitaline
Data on US Stock Market vs India Stock Market
*Data as on 31 Jan 2020. Source: Index factsheets

Disadvantages of Investing in India

  1. Volatility: The Indian Stock Market is more volatile than the US stock market. This means that global changes can have an adverse effect on the market.

  2. Currency: There is always a risk that the Indian Rupee will depreciate in value and eat into some of the profits you may have earned.

Disadvantages of Investing in US Stock Market

  1. Paperwork: Investing in US Stocks will involve more paperwork and documentation than investing in India.

    NOTE: If you invest in the US via Cube Wealth there is only 1 extra step compared to investing in India

  2. Awareness: You are more likely to miss out on important political, economic and social factors that drive change in US Stocks while sitting in India.

Should you invest in India or the US Stock Market?

Now that you have seen the pros/cons of the two markets you will be inclined in one direction. Of course, it is completely understandable if you still haven’t made up your mind. Just scroll to the bottom and enter your details to get free advice from Cube Wealth Experts.

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