You are saying they charge 3.5% at every payin and payout? Seems ridiculous to me.
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not at every payin payout. but every time you convert your money from usd to inr and inr to usd
It’s same right? If I have savings account in INR obviously I would have to convert INR to USD and vice versa at every payin and payout
Is this more or less same for every broker like webull, hdfc global investing, etc?
Its better only when you are investing in US equities through a Mutual Fund. Its the best option out there.
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Yes, its almost the same with all players.
That is why Zerodha is trying to reduce these costs before they introduce their own platform for this
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Apart from the standard exchange transaction cost, there is TCS (Tax collected at source) of 5% that will be deducted when you convert funds from your resident account. Please read the attached article on this. However if you are an NRI and maintaining NRE account, then this TDS will not arise if you remit the funds from your NRE account.
Disc: Not an expert.
True…
But it makes sense to me as earning in UK and Singapore and investing there…it charges 7% to send and get back money to India market’s and considering the rupee value is going down…then when I take money out of India it will be costly with transfer chargers and also rupee going down
But India’s who spend rs60 per dollar after years will get rs74 per dollar and only have to worry on 7% fees.
i completely understand your argument and infact what you do would be the right thing given the continuous rupee depreciation in the past.
but, times seem to have been changed. back then we hardly had 10 months of forex reserves and it was always a call between defending rupee from speculative attacks and saving for imports.
But, covid scenario seem to be entirely different and india now has 650 + Billion $ as forex reserves ( including the dollar forwards the rbi entered).
so, DON’T BET AGAINST INDIA.
It’s not exactly what I mean to bet …what really I meant is that is worth to invest in India market’s or foregin market’s with small amount of money thinking I can take it back anytime. And also what I told the currency advantage india gor other’s don’t get…
My two bits on this.
Disc: Not an expert at all and I could be absoloutely wrong.
If you are an NRI and living abroad, yes, it makes sense to invest in US markets. If you live in Singapore, there are few PMS who invest in India as well (which you could consider).
With regard to INR-USD, do not expect this rate to improve. INR will only depreciate in the long term, but the rate at which it will depreciate no one can tell, what is constant is depreciation is for granted. Check with any Indian Bank who offer forward premium USD fixed deposit for NRI’s The forward rate of INR-USD in 5 years time is around 88.
There could be ups and dips in short term but in the longer term ask any Banker, it is only going to be depreciation.
If you are an NRI and wish to settle abroad, then it is pointless to invest in Indian Market and your better option is to invest in US market in USD. However if you are an NRI and wish to return to India in future, then it is better to start investing in Indian Market, so that by the time you come back, you would have a decent corpus.
How to circumvent the currency depreciation when investing in India, you could invest in tech stocks like TCS and Infosys where their major income is in USD. You can also think of investing in ETF of Motilal Oswal Nasdaq 100 or very recently, Mirae Asset - FAANG - ETF. There are few mutual funds who invest overseas as well. This will give you the benefits of investing in US based stocks and at the same time, the NAV will have the benefit of any currency depreciation as it is in INR (Taxation is a separate thing which you need to look at as well).
Please do read my disclaimer - these are my personal thoughts only and I am not an expert. @Ratna_sai_kosuru
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My two cents too. I have tried to structure my thoughts on the following 4 points.
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The only reason we invest in Indian equity is because we were born here. Let that sink in. We never made a conscious choice. And it has never been easy or cheap to invest outside India. Indian equity was the only convenient option for us. But now it is neither hard nor costly. You have Motilal Oswal S&P fund which allow you to own S&P 500 without any money lost in forex markup or ‘transaction fees’
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India is just 3% of world’s GDP. Investing in India is very much like being a frog inside a well. India’s largest company by market cap, Reliance Industries, would be #74 in a list of US companies.
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Correlation between Nifty 50 and S&P 500 long term returns is actually negative. Hence investing in S&P 500 gives you good diversification. You also get extra benefit from USD INR currency movement.
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Look at the S&P 500 list of companies and then look at Nifty 50 list of companies. Which companies will you choose? Which companies do you use on a regular basis? Which companies do you want to bet your money on?
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I think this report is flawed!! , who is going to invest Rupees Ten thousand in USA!!
i agree on the part of depreciation. what i wanted to convey but missed doing so, is that India is better placed to defend speculative attacks on the INR. Expecting sharp depreciation in INR like in 2013 would not be wise.
The rate of depreciation has fallen and might continue to do so.
Given that the inflation trends in both countries doesnot seem to follow the historical trends, and in extreme case, both india and usa could have similar inflation for prolonged time.
with the inflation differential being the key factor for usd-inr rates, i personally dont see so much of depreciation.
inspite of all the above, mutual funds are a better vehicles for foreign diversification. i made the comments considering direct investing in usa into stocks which is in trend now. i presonally hold motilal oswal nasdaq etf.
hope this clarifies the stance taken!
there are people. i know a friend of my sibling who invests 100 dollars every month. he gets advice from a person who charges him 7500 per year. they buy fractional shares. the thing is they start at the bottom of the market and feel it is profitable now. once the music stops they will realise the truth.
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Funda is multiplication of say 75, If one invest or trade with at least 15K dollar is worth playing American market.
Nice analysis. Forward market premium backed FD is new thing should try
I usually create FD in Singapore DBS bank,as unlike USA it’s government bank. That’s the biggest advantage I face. Like I made FD when rupees was rs 50 now I broke the FD when rupees is rs74 and sent money to India for building new house for parents. I used to get 4% to 5% now interest rates r par with india.
PMS is great option should try out soon. I invest in stock market through my mother and father using there money. Like my mother has an account and use her fund’s to invest and also the funds I sent her as gift…this way I can bypass need to use A2 forms and also costly brokage.
Here’s my take on it:
If you have a sizable portfolio in the Indian stock market via direct equity or via mutual funds, and feel the need to diversify and explore other options, investing in US stocks makes sense. Otherwise you tend to be investing in the same set of companies via different MF, or direct equity.
I have seen the tabular representation that is shared in this thread which denotes the loss of money simply by moving the funds back and forth to India. I believe it is an illogical consideration if you are a long term investor and are looking at building a decent size portfolio in US stocks.
If you are planning to diversify less than Rs. 50000 a month or have less than a 5 year horizon, I don’t think you should consider investing directly in US stocks. For such purposes, you would be better off investing with Indian MF that invest in US stocks, as someone in this thread has rightly mentioned.
But if you are looking at keeping aside a larger sum every month, then by all means consider the US stocks. This is why I favour investing there:
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Investing in a different geography and companies that do not depend on India’s economic conditions helps spreading your risk
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Someone in this thread has said that US stock markets give lesser returns than a developing economy such as India. That’s true if you are looking at investing in Index funds such as S&P 500, Nasdaq Top 100, Dow. But remember that most of the biggest innovations take place in USA. Such companies have a much higher growth trajectory than the index. Yes, you would need a good study to find those companies from the 5000 odd stocks. You would also get a sense of satisfaction that you have invested in one of those innovative companies. If you are unable to research yourself, there are professional services available for helping you narrow down. And those services are not necessarily expensive if you look around a bit. Rest of the decision is yours,
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Someone in this thread has warned that there is 5% TCS deducted by the bank. If you are not filing returns, this can be a hurdle. I don’t believe anybody having surplus Rs. 50k /month for investing via bank route and passing the above mentioned criteria would not be filing tax returns. So if you are a tax payer, you can certainly claim credit for the TCS paid, absolving you from a so-called expense.
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Someone in this thread has warned about 3.5% commissions of the bank while converting the currency. These are true for some of the old school banks who have bloated costs for literally every service. I encourage you to look at other competitive offerings. Some private banks charge commission as less as 1% with very low transfer charges.
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INR is going to continue its downward journey against USD for the next few years. India cannot compete with other countries for exports if INR rises. Hence be assured, the Govt. will never let that happen. This will indirectly help you when you bring those funds back to India assuming you have at least a 5 year horizon.
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If you sell the US stocks after 2 years, the taxation rate in India is 20% and is eligible for indexation benefit. There is no tax payable in USA. If you sell within 2 years, it will be a short term gain as per your tax slab. Dividend is taxable in USA, but you can claim credit for that while filing your tax returns in India. Some of the new age investing apps provide a tax statement, and hence you don’t need a CPA from USA to do any filings for you. Hence taxation wise also, I don’t see a hurdle.
So depending on your investible funds and time horizon, you can take a call.
Note that there are several apps that let you invest in US stocks. You need to carefully compare them on parameters like:
- Charges to load funds and withdraw funds (ideally to be withdrawn when your investment goals have reached)
- Ability to invest in fractional shares (some apps have a very narrow selection of shares for fractional investing which is never known till you start investing)
- Some charge brokerage for buying and selling. Some others have no charges at all.
- Some apps have only selected stocks available in the base level, and may require you to upgrade for a wider stock selection.
- Some support Limit orders while buying/selling, some support only market orders, and some others support Limit orders for only complete share, not fractional.
Whichever app you choose, make sure you know which broker through which they are connected. Always ensure you are NOT investing through some “grey market” company who may not be under Indian regulations. Go only via legitimate apps/Indian institutions.
I really wished Zerodha had taken the lead to bring a product containing the best of features, but apparently they don’t see a mass market for this, which is true. As said at the start, US stocks are not suitable for the general retail market which Zerodha is focussing on.
Hope my answer has given you some practical points to consider in reaching a decision.
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