For years, Indian investors looking to invest in global companies such as Apple, Google and Microsoft had to navigate multiple platforms to access US markets.
Zerodha's entry into the US stocks and ETFs makes it easier for Indian investors to explore these opportunities. But with more ways to invest overseas, an important question arises: does adding US stocks to your portfolio actually help improve returns and diversify your investments? The answer depends on how we choose to invest, our financial goals and the role international exposure plays in our overall portfolio.
Why Invest in the US Stock Market?
Investing in US stocks can help Indian investors diversify their portfolios by spreading their money across two markets. For instance, if you have Rs 1 lakh invested in Indian equities, you could consider allocating Rs 20,000 to US stocks while keeping the remaining Rs 80,000 in domestic equities. This would give you exposure to both markets, reducing your reliance on the performance of Indian stocks alone.
The US market also offers access to global companies such as Apple, Microsoft and Amazon, allowing Indian investors to participate in their growth. However, international investments come with their own risks, including currency fluctuations and differences in market performance, so the right allocation depends on your financial goals and risk appetite.
Also Read: Investing In US Stocks Through Zerodha? Charges, Tax Rules And LRS Limits Explained
ETFs Make Diversification Simpler
You do not always have to select individual stocks. Exchange Traded Funds (ETFs) help you to get exposure to multiple companies with just one purchase.
For example, an S&P 500 ETF gives you exposure to 500 leading US companies. Rather than picking five or ten companies yourself, you can gain exposure to many more companies through one fund.
This may be helpful for those investors who wish to diversify internationally without having to spend hours studying individual companies.
Don't Ignore Currency Risk
Investors should note that their returns also depend on the rupee-dollar exchange rate. In case the dollar becomes stronger than the rupee, their returns in rupees will increase, and vice versa. Investors must also keep in mind transaction fees, taxes, and other regulatory considerations while investing.
Also Read: You Have Rs 10 Lakh In Mutual Funds. Can You Survive 1 Year Without A Salary?
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