Investing in US stocks becomes easier and cheaper; diversify your portfolio, own high-growth tech stocks | MAINTENANCE

Investing in US stock markets could help diversify investment portfolios across geographies and business segments. Additionally, US equity markets offer exposure to opportunities rarely available in India. High costs and the cumbersome process of transferring money overseas have long kept Indians from investing in the United States, but that is changing. The LRS (Liberalised Remittance Scheme) allows Indian residents to send up to $250,000 per financial year abroad. Interactive Brokers, based in the United States, is among the brokerage firms that offer trading in forex, stocks, options, futures, fixed income and mutual funds to Indian residents. Ankit Shah, Director, India Office, Interactive Brokersspoke to FinancialExpress.com’s Shaleen Agrawal. He explained why Indians should consider investing abroad and how; and how costs go down and processes become easier. Here are edited excerpts from the interview:

How big is the Interactive Brokers network globally and how do you plan to reach customers in India?

Interactive Brokers started 40 years ago. Today, it offers services on 135 exchanges in 33 countries and supports investments in 23 currencies. It has $373.8 billion in customer equity as of 02/01/2022. Interactive Brokers offers the advantage of low cost, superior technology and a wide range of products on a global scale. It also offers investments in more than 45,000 mutual funds, including more than 17,000 funds with no transaction fees. Interactive Brokers has over 1.7 million customers worldwide in more than 200 countries and territories. In India, Interactive Brokers has introduced brokers such as ICICI Direct, Kotak Securities and others who offer their services to their clientele to access global markets.

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Why should Indians invest in US stocks when they can easily invest in Indian markets?

Investing in the US could give exposure to high-growth tech stocks and themes that may not be found in Indian markets. Investing in the United States and other international markets offers investors a chance to diversify their investment portfolios.

What are the costs and process difficulties and challenges that Indian investors face when investing in US stock markets?

There is a key deterrent to investing in US markets, which is sending money overseas, and there are two reasons for this: high costs and cumbersome processes. The costs of some banks are high even if processed digitally. Money transfer fees include flat fee + exchange rate spread. More recently, banks have begun to reduce these costs as competition intensifies.

Is the cost of overseas money transfers likely to decrease with UPI transfers?

With the recent RBI regulatory sandbox in which overseas money transfer may soon be available through the UPI framework, we believe the costs will decrease even further and may become negligible over time and the process will become much easier. Regarding the remittance process, a few years ago, a bank offered overseas capital account remittances. Now there are more than five banks that support this through a digital method. Interactive Brokers has also worked with some of these banks to further facilitate the digital money transfer process.

Want to learn more about investing in US stocks? Visit the Invest Abroad section on FinancialExpress.com