How to diversify your portfolio with US stocks in the most cost-effective way

Profitable money making opportunities abound in the stock market. However, adequate diversification is necessary to keep the risks at bay. An efficient strategy to lower risk and improve your chances of making money is to diversify your portfolio with US stocks. In an exclusive interview with Financial Express Online, Jawahar Vadivelu, Chairman of Tradeplus shares his views on the importance and benefits of geographic diversification for Indian investors. Further, he lists the easiest and most cost-effective investment options for Indian investors who are looking to diversify their portfolios and invest in US stocks. Excerpts:

Should Indian investors diversify across US stocks?

When it comes to investing in US stocks specifically, there are several reasons why Indian investors should consider diversifying their portfolios in this direction. First and foremost, the US stock market is the largest and most mature in the world, with a diverse range of companies across various sectors. This presents a unique opportunity for investors to access some of the world’s most innovative and successful companies, many of which are not available in the Indian market.

Furthermore, the US economy has a history of stable growth, and its financial markets are well-regulated, making it a relatively safe and secure investment option. This is particularly important for Indian investors who may be looking for stability and a hedge against the volatility of the Indian market.

In addition, investing in US stocks allows Indian investors to benefit from the strength of the US dollar, which is often viewed as a safe haven currency. This means that, in times of economic uncertainty, the dollar tends to appreciate, which can help to offset any losses in other parts of an investor’s portfolio.

Moreover, by diversifying their portfolios across different geographic regions, Indian investors can potentially reduce their overall investment risk. This is because different markets tend to perform differently at different times, and by investing across multiple regions, investors can smooth out some of the ups and downs that come with investing in any one market.

Overall, while investing in US stocks is not without risk, there are several compelling reasons why Indian investors should consider diversifying their portfolios in this direction. From accessing some of the world’s most innovative and successful companies, to benefiting from the strength of the US dollar and reducing investment risk through geographic diversification, there are many potential benefits to be gained from investing in US stocks.

Also Read: How to invest in Nasdaq 100 stocks without opening an international trading account

When it comes to international investing, what is the easiest and most cost-effective way to invest in global brands?

For most Indian investors who are looking to diversify their portfolios and invest in US stocks, the easiest and most cost-effective way to do so is through exchange-traded funds (ETFs) and mutual funds. These investment vehicles offer a simple, efficient and low-cost way to gain exposure to a wide range of US stocks and other global markets.

ETFs in particular have become increasingly popular in recent years due to their low fees, high liquidity and ease of trading, making them a convenient ‘building block’ of a globally diversified portfolio. By investing in ETFs that track major US indices such as the S&P 500 or the Dow Jones Industrial Average, investors can gain exposure to some of the largest and most successful companies in the world, including tech giants like Apple, Amazon, and Google.

In addition to ETFs, Indian investors new to global investing might also consider international funds, which provide diversification and exposure to US stocks and other global markets. These funds are typically managed by investment professionals who have expertise in selecting and managing a diverse portfolio of stocks from different countries and sectors, allowing investors to benefit from a well-diversified portfolio that can help to mitigate risk.

Overall, ETFs and mutual funds are a great way for Indian investors to gain exposure to US stocks and other global markets in a simple, cost-effective and convenient manner, while international funds can offer a more diversified approach to global investing that is suitable for investors who are just starting out.

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