But is wealth creation limited to owning high-value physical assets that regularly earn you a fixed rate of return or a lump sum after the bond matures? Well no.
Creating wealth now means making your money grow; beyond tangible assets and geographic locations.
Modern ways to make money grow involve investing in stocks, ETFs, bonds and commodities to tap into the potential of growing sectors and markets while contributing to company net worth.
Investing regularly helps you take advantage of natural market fluctuations. When you invest a fixed amount consistently over time, you can build wealth that grows and acts as an alternative source of income for investing in physical assets, family action plans, and planning for study abroad of your child.
So where do you start investing? Many Indian investors have chosen US stock markets as their first choice when it comes to exploring global markets.
It hosts the most developed, liquid, flexible and efficient financial markets in the world. A wide range of funding sources â from banks and investment firms to venture capitalists and angel investors â enable innovation and expansion, giving businesses in the United States a significant advantage.
And the best part is that you don’t need to put down a huge sum of money to be able to invest in the best stocks like Microsoft, Zoom, Amazon, Netflix and Google.
You can do this by owning just a fraction of the stock and reap the rewards of company performance. Let’s talk about some of the best reliable ways to build wealth in the US markets and reap the benefits of steady returns.
1. ETF: Direct investment in stocks requires a certain degree of expertise, otherwise it can lead to losses for investors. In such a case, you can opt for mutual funds and exchange-traded funds (ETFs) in which investing in one fund gives you access to several US stocks at one time.
2. Direct Actions: You can directly open an overseas trading account with a domestic brokerage that has ties to US brokers. These foreign brokers act as intermediaries and execute trades on your behalf in the foreign market. This makes the whole investment process in a transparent and secure global market.
3. Commodities: Stocks like oil, energy, and gold are the best options for investing in US markets. The current stock market volatility has led to increased investor participation in commodity markets as well as crude oil and precious metals after geopolitical tensions in Europe. These assets are a safe haven for investors compared to risky assets and saw a record rise in March.
Gold futures are currently hovering around the $1,840 per ounce levels and commodity traders are betting on bullion trading above $2,000 per ounce in the coming days. This makes commodities like gold have more upside from their current levels during any type of crisis.
4. Mutual Funds: One can also invest in foreign stocks by investing in mutual funds that invest in stocks listed on stock exchanges outside India. This is perhaps the easiest approach to investing in foreign stocks, as it does not require opening a trading account overseas or even maintaining a high minimum deposit.
5. Bonds and Certificates: Government bonds are less risky, low-yield securities best suited to investors seeking stable and secure growth in the markets. These bonds can be purchased either from a direct broker or through exchange-traded funds. Some government bonds come with special tax benefits, making them attractive to conservative investors.
Now that we’ve understood the basics of stocks and how to invest in them, it’s time to dive deeper into portfolio management with US stocks:
a. Diversify a percentage of your existing portfolio to add global stocks: As an Indian investor, you may already have a profitable portfolio dedicated to Indian stocks and bonds. Venturing into global markets does not necessarily require a completely different portfolio. Instead, you can continue to allocate 10-15% of your total portfolio to US stocks. You can feel free to change the proportion based on your preferences and understanding of the market.
b. Diversify within the portfolio: Once you have diversified your portfolio geographically, the next step is to divide your global portfolio into sectors with little or no correlation between them. For example, adding Pharma stocks with Gaming stocks allows you to balance your income if one of the sectors fails for some reason.
vs. Reorganize and review your asset classes: Although stocks can be the most attractive investment vehicles, it is always advisable to spread your wealth among companies you know and trust. Additionally, for a successful portfolio, you can venture into a variety of asset classes like exchange-traded funds, real estate trusts, or even retail stocks. You can consider adding new sectors based on their performance while keeping XX% of your global portfolio fixed and reorganizing the rest.
D. Take timely action to restructure your investment: US markets are subject to a variety of risks, from falling dollar, inflation, interest rate revisions by the Federal Reserve and reports on work. Being one of the major markets across the globe, many factors such as business cycles, global crises, and geopolitical conflicts can impact a sector or an entire industry. Therefore, making regular reviews of your portfolio will help protect your funds against major losses.
e. Always strive to invest for the long term: No matter how exciting it can be to buy and sell your stocks based on market volatility, it is always advisable to stay long term. Owning high-performing stocks not only helps you fight inflation and losses due to economic cycles, but also helps you save for big purchases or retirement. While you can always add futuristic stocks to your portfolio, you need to make careful decisions under expert guidance for higher profits.
(The author is co-founder of Stockal, a fintech for investing in international stocks)