Investing Abroad | In the era of globalization where many companies are expanding their business over the global map would be an opportunity for an individual investor to invest globally, however it is not a smooth drive as when it comes to money matters lot of obligations and regulations are involved, however this is not impossible in this digital time where a investment is just a click away after you full fill all the prerequisites. The international stock investment diversifies your portfolio both geographically and sector wise also acts as evade against currency fall. With the technology at your fingertip, you can easily navigate the trade movements and analyze the growth trajectory and take a calculated investment decision.
How to Invest is US
Invest in US using American Depository Receipts (ADR)
Being one of the developed economies, US is one of the attractive ground for investors where most of the fortune 10 players like Google, Apple, Microsoft, Tesla are available to invest. Investors who are looking to expand their investment portfolio by adding international stocks have certain ways to dive in. The instruments such as Depository receipts – American depository receipts (ADR) & Global depository receipts, Exchange-traded Funds (ETF), Overseas-focused mutual funds, direct investment in foreign stock and employee share-based plan (ESBP) are available with people to include in their portfolio.
As per finacialexpress.com – ADRs are one of the most popular and convenient ways to foray into international stock investment owing to ease of use, dollar-based pricing and standard terms and conditions. American depositary receipt (ADR) is a security that is used by foreign companies to trade on U.S. stock exchange. ADRs can be listed on any of the New York Stock Exchange (NYSE) or the Nasdaq but are also sold over the counter. Banks and other financial institutions buy the shares of these companies through their foreign branches and make ADRs available for investors as a form of indirect ownership. Their treatment is however similar to other domestic stocks listed on the exchange. ADRs are often a must-have in an International investor’s portfolio. ADRs can be both sponsored and unsponsored and generally have three levels depending on the trade requirements of the companies.
Global Mutual Funds
Global mutual fund is another instrument which can be used by the investors who want to start their global investment journey. These funds are typically invested in the assets outside the investor’s home country. These funds become free from any domestic disruption and therefore give diversification and potential returns.
ETFs are one of the convenient instruments that enable domestic investors to take international routes. ETFs have a similar attribute to the mutual funds where funds are collected from multiple investors and invested as a corpus in global stocks after a systematic evaluation and trend projections. ETFs have a low risk of trading and are considered a safer option to start with.
To invest out of India, investors have to follow rules and regulation defined by RBI, as of now here is the guideline for investing out of India
An Indian Party (IP) / Resident Individual (RI) which has made an Overseas Direct Investment (ODI) has to submit an Annual Performance Report (APR) in Form ODI Part III to the Reserve Bank by 30th of June every year in respect of each Joint Venture (JV) / Wholly Owned Subsidiary (WOS) outside India set up or acquired by the IP / RI (as prescribed under Regulation 15 of FEMA Notification, ibid).
With effect from April 13, 2016, the AD bank, before undertaking / facilitating any ODI related transaction on behalf of the eligible applicant, should necessarily check with its nodal office to confirm that all APRs in respect of all the JV / WOS of the applicant have been submitted. Further, certification of APRs by the Statutory Auditor or Chartered Accountant may not be insisted upon in the case of Resident Individuals. Self-certification may be accepted.
With effect from April 13, 2016, where multiple IPs / RIs have invested in the same overseas JV / WOS, the obligation to submit APR shall lie with the IP / RI having maximum stake in the JV / WOS. Alternatively, the IPs / RIs holding stake in the overseas JV / WOS may mutually agree to assign the responsibility for APR submission to a designated entity which may acknowledge its obligation to submit the APR in terms of Regulation 15 (iii) of Notification, ibid, by furnishing an appropriate undertaking to the AD bank.
Where the law of the host country does not mandatorily require auditing of the books of accounts of JV / WOS, the Annual Performance Report (APR) may be submitted by the Indian party based on the un-audited annual accounts of the JV / WOS provided:
(a) The Statutory Auditors of the Indian party certify that the law of the host country does not mandatorily require auditing of the books of accounts of JV/WOS and the figures in the APR are as per the un-audited accounts of the overseas JV/WOS.
(b) That the un-audited annual accounts of the JV / WOS has been adopted and ratified by the Board of the Indian party.
(c) The above exemption from filing the APR based on unaudited balance sheet will not be available in respect of JV/WOS in a country/jurisdiction which is either under the observation of the Financial Action Task Force (FATF) or in respect of which enhanced due diligence is recommended by FATF or any other country/jurisdiction as prescribed by Reserve Bank of India.
Investment in Foreign Real State
As per financialexpress.com – Buying property abroad is not easy and requires lots of deliberations, apart from meeting some conditions. However, people with deep pockets – especially those who are planning to settle abroad sooner or later, or already have business interests or family in a certain country – can acquire a residential unit either as a second home or investment.
A research report by ANAROCK Property Consultants says that depending on their purchasing power, plans and objectives in the target country, one may also opt for affordable housing in the outskirts of main cities or compact office-cum-residences closer to the city centres. However, this requires a fairly sound understanding of the market as the lack of such knowledge may result in a disastrous purchase decision.