how to diversify investments internationally

Let’s play a game. Open your phone.
What apps do you see? Instagram? WhatsApp? Amazon? Netflix?
Now look around your room. Is there an Apple laptop? Are you wearing Nike shoes? Did you drive a Hyundai to work?

We live our lives globally. We use American technology, Korean cars, and Japanese electronics every single day.
But when it comes to investing our money, we get scared. We keep 100% of our wealth trapped inside India—in FDs, Gold, and Indian stocks.

how to diversify investments — How to diversify investments

This is what financial experts call “Home Bias.” And honestly, it’s a dangerous habit.
While India is a growing economy, it represents less than 3% of the world’s stock market value. By ignoring the other 97%, you aren’t just missing out on profit; you are taking a massive risk.

If the Indian market crashes tomorrow due to a bad budget or a weak monsoon, your entire net worth goes down with it.
The solution? International Diversification.

In 2024, you don’t need a Swiss bank account to invest globally. You can own a piece of Tesla or Google just as easily as you own Reliance.
Here is the unfiltered guide on how to send your money on a world tour, legally and safely.

The Secret Weapon: The Dollar Hedge

Before we talk about how, let’s talk about the biggest reason to do this. It isn’t just about buying cool tech stocks. It’s about the Currency.

Look at the history of the Rupee vs. the Dollar.
Every year, on average, the Rupee gets weaker by 3-5% against the Dollar.
This means if you hold US assets, you win twice.

Stock Growth: If Apple stock goes up, you make money.
Dollar Growth: Even if Apple stock stays flat, but the Dollar goes from ₹83 to ₹85, your investment value in Rupees goes up automatically.

It is a natural shield against inflation in India. It’s like having an insurance policy for your portfolio.

The “Easy” Way: Mutual Funds (No Hassle)

If the idea of opening a US brokerage account sounds terrifying, don’t do it. Start here.
You can invest in foreign companies using your normal Indian Demat account.

Many Indian Mutual Funds offer “Feeder Funds.”
Basically, you give them Rupees. The fund manager converts it and invests it in a US fund (like the Nasdaq 100 or S&P 500).

How to do it:
Log in to your Zerodha or Groww app. Search for “Nasdaq 100 Fund of Fund.” Start an SIP.

The Good: It’s simple. No extra KYC. No tax filing headache abroad.
The Bad: The fees (expense ratio) are a bit higher, and the tax rules recently changed (gains are taxed as per your income slab). But for beginners, the convenience is worth the cost.

The “Pro” Way: Buying US Stocks Directly

If you want to feel like a real investor—if you want to say “I bought Microsoft at the dip”—then go direct.
A few years ago, this was a nightmare of paperwork. Today, fintech apps have solved it.

The Tools:
Apps like INDmoney, Vested, and Stockal act as a bridge.

Sign Up: Upload your PAN/Aadhaar.
Send Money: Transfer funds from your SBI or HDFC bank to the US account they create for you.
Buy: Click buy.

The Magic of Fractional Shares:
“But Amazon shares cost ₹15,000!”
In the US market, you don’t have to buy a whole share. You can buy a slice.
You can invest $10 in Amazon. You own 0.05 shares, but you still own them. This lets you build a portfolio of 10 giant companies with just ₹10,000.

Is it Legal? (The LRS Rule)

Yes. 100%.
The RBI has a rule called the Liberalised Remittance Scheme (LRS).
It says every Indian can send up to $250,000 (approx ₹2 Crores) abroad every year legally. Unless you are planning to buy a private island, this limit is huge.

The TCS Warning:
There is one catch. If you send more than ₹7 Lakhs in a year, the bank deducts 20% as TCS (Tax Collected at Source).

Don’t panic: This isn’t a cost. It’s an advance tax. You can claim it back as a refund when you file your ITR.
Smart Move: Keep your transfers under ₹7 Lakhs a year to avoid the paperwork.

The Strategy: Don’t Pick Stocks, Pick the Market

Buying individual stocks is risky. What if Tesla crashes? What if Facebook gets banned?
The smarter move is to buy the whole basket via ETFs (Exchange Traded Funds).

VOO: This ETF buys the top 500 companies in the US (S&P 500). It’s the safest bet.
QQQ: This buys the top 100 tech companies (Nasdaq). Higher risk, higher reward.

Why do I love ETFs? Because the fees are almost zero, and you get instant diversification. You bet on the US economy, not one CEO.

The Tax Headache (Simplified)

Investing abroad means dealing with two taxmen: Uncle Sam (US) and Nirmala Sitharaman (India).

1. Dividends:
If you earn dividends (profit share), the US takes a flat 25% cut before the money hits your account. (You can claim a credit for this in India, but it’s automatic.

2. Capital Gains:
Good news: The US charges ZERO tax on profit from selling stocks for foreigners.
Bad news: You have to pay tax in India.

Long Term (Held > 24 months): 12.5% tax.
Short Term (Held < 24 months): Added to your income and taxed at your slab rate.

Final Advice: Don’t Go Crazy

You live in India. Your expenses are in Rupees. Your retirement will likely be in India.
Don’t put 50% of your money abroad. That’s too much risk.

A healthy allocation is 10% to 20%.
Think of it as the “growth engine” of your portfolio. While your Indian FDs keep you safe, your US Tech stocks make you rich.

Start small. Open an account. Buy your first $50 worth of the S&P 500. Watch how it works.
The best time to plant a tree was 20 years ago. The second-best time is now

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