Investing in the US stock markets could help diversify investment portfolios across geographies and business segments. Moreover, US stock markets offer exposure to opportunities seldom available in India. The high costs and tedious process of moving money abroad has for long kept Indians from investing in the US, but that is changing. LRS (Liberalised Remittance Scheme) allows Indian residents to remit up to $250,000 per financial year abroad. US-based Interactive Brokers is among the brokerage firms providing trading in forex, stocks, options, futures, fixed income, and mutual funds to Indian residents. Ankit Shah, Director, India office, Interactive Brokers, spoke to Shaleen Agrawal of FinancialExpress.com. He shared why Indians must consider investing abroad and how; and how costs are getting lower and processes getting easier. Here are edited excerpts from the interview:
How big is Interactive Brokers network worldwide, and how do you plan to reach customers in India?
Interactive Brokers started 40 years ago. Today it offers services on 135 exchanges across 33 countries and supports investing in 23 currencies. It has USD 373.8 billion in client equity as of 2/1/2022. Interactive Brokers offers the advantage of low cost, superior technology, and a wide breadth of products globally. It also offers investments in over 45,000 mutual funds including over 17,000 funds with no transaction fees. Interactive Brokers has over 1.7 million customers worldwide from over 200 countries and territories. In India, Interactive Brokers has introducing brokers such as ICICI Direct, Kotak Securities and others that offer its services to their clientele to gain access to global markets.
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 in themes that may not be found in Indian markets. Investing in the US 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 while investing in US stock markets?
There is one key deterrent for investing in US markets i.e. remitting money abroad and there are two reasons for this – high costs, and tedious processes. The costs at some banks are expensive even though they are being processed digitally. The costs of remitting money comprises a flat fee + FX spread. More recently, banks have started to reduce these costs as competition increases.
Will the cost of remitting money abroad likely fall with UPI transfers?
With the recent RBI regulatory sandbox wherein remitting money abroad may be made available soon via the UPI framework, we do believe that the costs will come down even further and could become negligible over time and the process will become much easier. As for the process of remitting funds, a few years back there was one bank offering capital account remittances abroad. Now, there are over five banks supporting this through a digital method. Interactive Brokers has also worked with some of these banks to further ease the process of digitally remitting money.
Want to know more about investing in US stocks? Visit Investing Abroad section at FinancialExpress.com
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