Looking at things in aggregate like EM vs. DM will make one miss the big picture. I am not buying the DM index vs. EM index. I am picking a basket of stocks in DM that are innovation driven, high-tech and disruptive. See the difference!
Well said.
Let a good CA manage the taxation issues. Exchange cost and commissions are very minute when compared to the opportunities that the basket of stocks provides
Regarding valuations that others talk about, more money is lost in market waiting for crash. I am going to top up soon and probably at a higher price. I saved USD 3000 by investing a few days back
Yes, agree that is a good option but the index has many stocks like IBM, HP etc. that I would not hold at all.
Goal of indexing is not to win over everyone else, but make sure you donât loose. Iâm active investor, but for passive investing I like NASDAQ+EEM(or Nifty50) combo. Itâs the best of both worlds IMO.
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Well, personally I quite disagree that Indian market has only opportunities in commodity plays. There are indeed potential multibaggers in waiting in different sectors, hence I said, one should be investing in right stocks at right time. They may be expensive today because they are showing growth. Not to forget, for a consistently growing company, what is expensive today is actually cheap 1-2 years down the line.
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In India 90% of companies have cost advantage, not innovation advantage. Itâs not a disadvantage, people who understand this and understand commodity/business cycles can make lots of money. But I am not one of those people. Sure you may find an anomaly, but itâs better to fish where the fish are, not in the desert.
If you donât believe me, check R&D as a percentage of revenue for industry in India vs US.
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they seldom dont understand very well. Indeed, these FAANG companies are incredibly complex and neigh impossible for anyone to understand
I suggest you donât pass judgements on others. What may be difficult for you, may not be so for someone else and what you understand, I may not.
much less value.
NTM EV/EBITDA of 15-20x with growth of 20-30%(in INR) is expensive? In India people are happy to pay 2-3 times for similar growth.
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People will invest in Reliance and Airtel but Amazon is too complex - this is cognitive dissonance.
Simple answer is investor of any sort should not miss the opportunity to widen their choice set - invest wherever you like that you find appealing. Do the work and be disciplined and you can absolutely understand other sectors and markets , or you can invest in ways that protect you against your ignorance through proper strategy and portfolio construction. Donât assume that just because youâre close to something, you understand it better - it also generates bias , and you can end up over paying or taking too much risk because youâre stuck in a small basket of your own creation. Never miss a chance to learn more.
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I agree with you. Reliance and Airtel arenât bad businesses. I would prefer to buy them over AT&T or Verizon. But it is much easier to buy innovative companies at cheaper price in US, because there isnât a scarcity premium.
Iâm not trashing Indian companies. Sorry if I came across that way. I have ~50% of my net worth invested in India. Low cost or commodity businesses w/ edge can have significant advantages and make money.(eg. Banking, auto cos in India have made lots of money). India also has growing faster economy which can benefit consumer businesses. But innovative companies are much more scarce, partly because investors donât see the bigger picture(eg. bottom line is preferred over spending in R&D to improve future cash flows).
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Hey,
Could you guide me to sources of data that you used to dig deeper into the potential in Adobe ,and Nvidia.
I am aware of the broad themes in them bit wanted to learn a bit more. Not really able to find data? Do you have any sources where I could learn about their industries.
Thanks.
Haha , I was supporting your argument - Reliance and Airtel are far more opaque and complex businesses than Amazon to me. While there are opportunities in India, they are absolutely more limited than the whole world - this is just a function of size of the market. And there are many kinds of companies that simply donât exist here. So what exploring does is give you more chances to find companies that suit your personal style - you canât really be a software investor sitting in India though you may have great knowledge from your professional life as a developer. On the other hand , you probably wonât be as good a consumer brand investor in overseas companies if youâre not used to the customer nuances in those markets , so Indian companies are probably better bets. You can make money focusing just on India or just outside, but why would you limit your degrees of freedom as an individual. Explore everything.
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Hi All
Greetings
Any advisory service available for US STOCKS
Rkirana, agree with you. Tech story is expected to dominate for quite some time. See 2020 story, how tech-based 6 stocks dominated US Market. You have the risk appetite and financial capacity to diversify into your desired theme in a different geography. I am using IBKR, itâs a safe and great platform. Wish you all the best
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Kiranji, commend you for going through a very thorough process for investing from India and doing it with Interactive Brokers in the US. They are a great broker and have been the lowest cost for a long time. Only recently Schwab broke the mold and made it completely free for everyone, but the cost of an investment portfolio is so low that it is not worth switching. For traders it is different.
All cash that is uninvested should be invested in ETFs like SCHO or ICSH or something similar since it will earn 1% or more using S.T instruments and at a low cost.
Picking stocks that have the Technology, Genome, Crypto, Blockchain, EV/Battery, FinTech etc disruptive themes and doing it for a 5 year period is the greatest approach since India will never give you those specific disruptive choices via a low cost ETF. There are SO MANY ETFs in the US that it is absolutely mind-boggling.
If someone does not want the disruptive theme then QQQ (Nasdaq 100) and SPY (S&P500) are the best of the best. Add in something like VWO (Emerging Markets) and you have Tech, Top 500 and Worldwide at whatever allocation mix you want.
I am going to stop here since I want to make sure Moderators do not cut this message out since I am talking too much about US!
KKP Investor
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Hi All, I have had done direct investing in US stock through Charles Schwab in the past and experience was very good. They have an international account category for people like us (Non-resident alien). Zero fees. Very good service. I guess minimum relationship needed to be maintained is around $25K.
Below are few of the challenges faced, which made me pull my US investments and now investing through International MFs of Indian AMCs:
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US Estate Tax for Non-Resident Alien: Which is basically, if something happens to the account holder, before passing on assets to legal heir, 40% of the asset has to be paid as Estate (Inheritance) Tax before IRS will give clearance to broker to transfer the assets. Also court probate order is needed to validate legal heir.
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Indian Tax compliance requirement is very high if you hold foreign assets
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Tax withholding on US dividends: When you take the credit for same in India IT returns, be prepared for the correspondence with IT Officer.
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There is more tax efficiency if invested through Indian MFs/ETFs
Just thought of sharing some of experiences, so that you all know what may come your way. Will be glad to answer any further questions.
Mukesh
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Thanks for the information. Can you please share your experience on the returns generated by direct route vs MF route ?
Hey,
Can you tell me about the tax compliance.
I hold non dividend paying stocks in my US account and will be holding for long term.
Unless I sell it , I donât need to do any tax compliance right?
Thanks
@Amit_Paul, Overhead you have with MF is around 1-2%. It is bit less if you go with index funds - S&P 500 or Nadaq 100 from Kotak or Motilal Oswal.
But then with MF, you donât get the thrill of picking your own bets.
Mukesh
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@Rushil, Per my understanding it is mandatory to declare all your foreign holdings in income tax return even if there is no gain / dividend on them. Please check with your CA, he may guide you better.
Mukesh
IMHO, NVDA is overpriced and can crack if the ARM deal doe snot go through (which is very likely). TSM is a leader in fabless and very far away from INTC in fabs