Investing in international equities has become more than easy today. With clear RBI guidelines and easy to use technology, anybody can invest in international equities
October 10, 2016
Equities are by far the best investment products available today to common man, provided, the investment is made wisely. How difficult it is to understand that if a company's revenues and profits are growing year on year, it's share price is also going to go up continuously. A little bit of profit and loss and balance sheet reading is all that you need.
As compared to many investment products available today, including but not limited to Fixed Deposits, Recurring Deposits, Mutual Funds, Insurance (although, I do not believe this to be an investment product), investment in equities gives the best returns. If you do a little bit of google research, you will find that the stock markets have given about 12 - 15% returns over a longer time period as compared to the 7 - 8% returns generated by other products.
One can invest in equities either directly or through the mutual fund route. Now, when we talk about generic investment and people have this options, which one is the better one. In Mutual Funds, you are giving the authority to the fund manager to take decision on your behalf, while in equities, you are giving that authority to your broker. In both cases, you are not taking your own decisions. The one, who gives you the better returns, wins.
When it comes to equities, you have two options available. Either you invest in Indian companies or you invest in international companies. The question, you have to ask is, what is my comfort level? Am I looking for diversification. I would say, think of it as a diversification option. Look around you. Do you drink coca cola, do you use visa or master card, are you using google, Facebook, windows? If you are, all these are American companies with global reach. You can imagine the stability that these companies can bring to your investments.
Look at the graph below.
This is the comparison of Apple vs others in the 12 year period since Aug 2004. Look at the return that Apple has been able to generate over these years. 162% annual returns. Even if you consider the split of Infosys or TCS that may have happened during this period, you are only looking at half of what Apple returns are. So, why lose on this opportunity?
While you can easily invest in Indian stock markets, you should also consider investing in the international equity. Now, how can you do this? How can you open an international equity account? What are the rules and guidelines?
So, here comes the Bangalore based firm, Just2Trade Pvt. Ltd. (www.just2trade.co.in) started its operations in April 2016, it wants to give a platform to the Indian investor, invest in international equities. The company enables you to open an international equity account, and you can buy equities on more than 30 exchanges across 12 countries. Opening an account is a straight forward process. You fill an online form and do your KYC process. Once your account is approved, you can fund your account and then start investing. Funding can be done via bank transfer or even by credit or debit card.
As far as the rules are concerned, as per RBI, a person can send up to $250,000 in a financial year as of now. These rules comes under the Liberalised Remittance Scheme or the LRS, as commonly know in the finance industry. However, a person cannot trade in margin based products (like derivatives) or in FOREX (Non INR currency pairs) under this scheme. However, one can invest in international equities under this scheme.
The aim of Just2Trade is to grow multi folds in the coming months. They are looking at adding a huge partner and client base. So, watch out for this space.