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When it comes to making an investment, Indians aren’t given as many opportunities. They are often limited to just going for domestic firms. According to experts, they should look into making investments abroad. This is a perfect way to diversify their wealth and expand their knowledge about the global market.
Having an international portfolio means that you will gain access to a collection of equities and other capital assets that focused on global markets instead of just local markets. When the portfolio is carefully designed, they gain access to both the developed and emerging markets, as well as diversification.
Moreover, things are starting to unfold after the world shut down from the pandemic. These global economies are gradually coming out of the back hole riddled with economic crisis. Hence, this opens doors of opportunities for Indians interested in investing in internationally.
Those considering long-term investments or abroad expenses such as international schools, travel, or retirement may consider offshore assets to reduce the danger of the rupee depreciating in value.
The Advantages of Investing in International Opportunities
There are several advantages to investing in foreign prospects. Listed below are the top reasons:
- These will diversify your portfolio: Foreign portfolio investing opens doors for investors to diversify what they already have. This takes them to a global scale that is like no other. You will be able to diversify your investment fund so that you also have more risk-adjusted returns.
- You will have international credit: You will gain access to credit in other countries and provide you with the leverage you need for a larger return on your equity investment.
- You gain access to different markets that come with a variety of risk-return profiles: If you desire to get higher profits, they be ready to run into higher risks as well. The emerging markets worldwide can give you a more elite and well-respected risk-return profile. It also must be noted that while there are greater risks, developed markets like the U.S. is able offer stable yet slightly lower returns as well. Essentially, the greater the risk, the better the returns.
- There will be currency diversification: When you purchase shares for an international portfolio, you also get to purchase the currencies that go with the stocks on the list. This means that if the value of the foreign currency lowers, your portfolio in other countries can help compensate for these common fluctuations.
Top Investment Opportunities for Indians Who Want to Invest Internationally
Singapore
Because of its solid and stable international links, Singapore is considered to be one of ASEAN’s top commercial and commerce hubs. The economy is strong. They rely heavily on exports, particularly with IT goods and pharmaceuticals. The constantly active tourist, retail, and financial service industries are considered competitive as well. This is a good place to focus on, especially now that the world has gotten control over the situation. People have generated sizeable budgetary actions to push the economy forward as it recovers. The International Monetary Fund, in fact, has made a forecast and said that they see a 5.2 percent real GDP growth in 2021.
Indians looking to make investments in this country can look into the following options:
- Straits Times Index (STI) ETFs: This is their most popular ETF. This constantly oversees the top 30 Singapore Exchange businesses. Investing in an ETF allows assets to be far more diversified when compared to buying just a single stock. As of September 30, 2021, the STI ETF has shown a 10-year return of a good 4.58 percent.
- Singapore Saving Bonds (SSBs): SSBs are a popular investment instrument. People seek this out because of its consistent and exceptional returns. For SSBs, the Singapore Government issues these, which explains its impressive reputation. While SSBs are considered reliable, these cannot make you wealthy if you focus on just these. Recent tranches show an average annual yields of roughly 1.45 percent. However, this is if you retain them for 10 full years until they mature.
United Kingdom
The UK has had a strong GDP growth of 7.2 percent in 2021. In 2022, it has been forecasted to be around 5.5 percent. The country is well into a great financial. Part of why it’s growing is because of a resurgence in consumption, particularly of the services. Inflation is expected to go up as well because of the latest rises in commodity prices and robust GDP growth. The good news is that the figures are expected to fall under the two percent inflation goal.
Indians looking to make investments here can consider these options:
- MSCI ETF: This is a simple method when making an investment in the country because they provide investors a diversified exposure in a single investment. These can be treated like stocks when trading. The MSCI United Kingdom Index Fund is the most popular one out there. They are able to provide exposure to large and mid-sized companies. The MSCI ETF has a 10-year return of 4.79 percent as of September 30, 2021.
- FTSE Top 100 Stocks: This index is a reflection of the top 100 businesses on the London Stock Exchange by market capitalization. They grew around 654 percent in price and 1,377 percent in total return between the years 1984 and 2019. This means that they’ve seen a 5.8 percent annual price return and a 7.8 percent yearly total return annually. AstraZeneca, Unilever, and other leading companies are part of the list.
Canada
Canada has experienced a strong international demand. They can expect to economically rebound immediately. They grew by 6.1 percent in 2021 and 3.8 percent in 2022.
Indians looking into making investments in Canada can consider these options:
- iShares S&P/TSX 60 Index ETF: The inception happened in 1990, and the iShares S&P/TSX 60 Index ETF was the world’s first ETF. They are considered to be the biggest and most liquid ETFs as they are able to provide exposure to major, reputable, and established companies in the country. As of September 30, 2021, this ETF has a 10-year return of around 9.21 percent.
- Real Estate: The real estate market of the country has remained stable. Unfortunately, low liquidity means that there will be delays in transactions. An economic slump means that there is a possibility that rentals will be lowered. Because of such, you need to have a high-risk profile to engage in their real estate market. In August 2021, home prices in Canada went up by 12.2 percent year on year.
United States
They have high hopes for the U.S. GDP. They expected it to expand by 6.9 percent in 2021, and by 2022, they see a 3.6 percent growth. The reason for this economic boost are the significant extra fiscal stimulus and a quick immunization program. With all these taking place, the unemployment rate will remain low, and growing earnings, federal grants, and accumulating household savings will be the driving force behind people’s spending.
Indians looking into making investments in the United States can look into these options:
- SPDR S&P 500 ETF: The S&P 500 index is oftentimes what people consider as the finest single indicator of large-cap U.S. equities. SPDR ETF opens doors for exposure to some of the top firms in the country. The top three industries here are information technology, health care, and communication services. They are responsible for more than half of the index. The SPDR 60 Index ETF shows a 10-year return of 16.5 percent as of September 30, 2021.
- Real Estate: Because of what has happened to the world, this area has felt it quite considerably, particularly some commercial and residential real estate investments. Most affected here are hotels and urban rents. On the other hand, economists predict that the average real estate return on investment (ROI) will go up. They see the values increase by 10 percent in the coming year. The average Year-over-Year ROI is currently 11.1 percent.
Australia
What’s expected to increase here is the domestic consumption. The country’s GDP will rise by 5.1 percent in 2021 and 3.4 percent in 2022. Consumption will be boosted because of the increase in salaries and the lowering of saving rate. Of course, there will be sectors of the economy that will remain awkward and insolvencies will still go up.
Indians looking into making investments in Australia can consider these options:
- iShares Global 100: The iShares Global 100 AUD Hedged ETF can provide investors with exposure to many of the most prominent large-cap firms in the world. This ETF hones in on blue-chip stocks and provides investors with “exposure to a broad variety of significant multinational corporations in established and emerging markets.” As of September 30, 2021, the iShares Global 100 AUD Hedged ETF shows a 10-year return of 16.28 percent.
- Real Estate: The most powerful way an investor can use to increase wealth and capital is through Australian property. A study has been made for blue-chip Australian property by the Australian Securities Exchange. They still saw the long-term return to stay at around 6.8 percent. The average rental income will increase to around four percent as well.
Conclusion
International investments have been democratized by legislative and technological advances. If you want to enter foreign markets, you can take comfort in the fact that they are no longer expensive nor complicated. These make optimistic prospects for Indian investors. Because of fractional shares, those with tiny portfolios and who are looking to invest can now consider premium companies such as Amazon and Google. Additionally, under the RBI’s Liberalized Remittance Scheme, they can now invest as much as USD 250,000 in overseas assets per year.
