Because of noteworthy advancement in science and innovation, the US has seen phenomenal development in the new past. It is nothing unexpected that the S&P 500, a list of the best 500 public US organizations is weighted towards unmistakable American tech monsters. Moreover, checking out the S&P 500 from 2001 to 2020, the normal US securities exchange return throughout the previous 20 years is around 7.45 percent.
Thus, on the off chance that you put $100 in the S&P 500 toward the start of 2000, you would have about $421 toward the start of 2021, accepting you reinvested all profits, which implies your speculation would have almost multiplied in roughly nine years.
With the force of huge information and the blast of Artificial Intelligence and AI, the energy of American mechanical advances will proceed with its bull run into what’s to come. Such steady development is yet to take structure in other worldwide business sectors. With corporate benefits on the ascent, America’s unrestricted economy has endure the pandemic, supply imperatives, and work deficiencies.
The equivalent can’t be said about other created nations like France, Italy and even Germany, whose financial exhibition has declined forcefully, uncovering the weaknesses in the development model of these nations. The US, notwithstanding, keeps on ruling. In the extended period of Covid, the US financial exchange took off, with high-flying firms like Apple, Microsoft, and Google parent Alphabet driving the current year’s meeting.
Assuming you are thinking about putting your well deserved cash in an unfamiliar economy, you need to ensure that your venture passages well paying little heed to the market air. As the rich ground for speculations, the US market is a channel to produce stable returns for your youngster’s future.
India presently conveys the second biggest populace of understudies concentrating abroad, with in excess of 50% of Indian understudies examining in North America. The absolute number of Indians seeking after their advanced education in the United States and the UK, Canada, and Australia has become consistently throughout the long term, aside from the concise rest in the midst of the pandemic.
According to the Ministry of External Affairs of India, in 2020 alone, 261,406 Indian understudies traveled to another country, contributing $7.6 billion to simply the US economy. As of August 2021, both the US and the UK have, once more, acknowledged record quantities of Indian understudies to colleges.
There is no doubt that to avail a degree from a high-ranking university, families need to be financially prepared. Therefore, taking into account the rising costs of higher education and rupee depreciation, investing in the US stock market is something you should consider.
Rupee depreciation and the benefits of investing in US dollars
With the value of the Indian rupee against the dollar, the British pound, and the euro falling by astonishing margins, higher education abroad is only getting more expensive for Indian students. The effects of the devaluation of the rupee only exacerbate the cost of higher education.
A weaker rupee also makes taking education loans a considerably expensive affair. To put this in perspective, if the cost of a Harvard MBA is around $81,272 for a year, you as an Indian family would have to shell out about Rs 60 lakh in 2021 (1 USD = 74.96 INR), versus Rs 50 lakh in 2015 (1 USD = 64.13 INR).
However, investing in the US stock market can help alleviate a significant chunk of the problem. Diversifying your investment portfolio with US Stocks will come in handy when your child is ready for their studies abroad as the returns can be used in dollar terms.
Investing in US Stocks, you can earn profits even with zero change in stock price. What that essentially means is that if at the time of selling a stock, the stock price has not changed, but the rupee has weakened by, say, 10 percent against the dollar, while converting the dollar back to INR, you stand to gain because of the value of USD.
Moreover, a fall in Indian Rupee against US Dollar, in fact, benefits Indians investing abroad because when the currency of the US stock appreciates, then there is an additional return on top of the holding period return in the asset.
A depreciated rupee, and thereby a stronger dollar, will add to the return. So if you invest in the S&P 500 index, for example, a 5 percent appreciation in the S&P 500 and a 2 percent dollar appreciation in the same year would result in returns of 5 percent plus 2 percent approximately in INR terms.
To achieve the same in India, you would have to invest more funds, use more leverage to see the same results. Also, US equities are far more liquid, meaning that the volume of trades is significantly greater, indicating bigger market moves in shorter periods.
Education expenses abroad
Investing in US stocks directly correlates to Indians planning their child’s future education. While education expenses abroad may feel like they are out of your budget, they do not necessarily have to be if you plan early and start saving for your child while they are still young. All future education costs, including application fee, examination fee, tuition fee, and the cost of living, need to be accounted for and adjusted for inflation.
The way to go about this is to save and invest in an instrument where your returns are two-fold — first as capital appreciation and dividends and second as the increasing value of the currency itself. Consequently, you can mitigate these seemingly large prices by investing in the same currency, which in this case, is the US dollar.
This is one of the main reasons why parents around the world are choosing to invest in the US equities market for the future of their children.
The normal expense of school in the US has significantly increased over the most recent 20 years, as of now at $35,720 each year, which is about Rs 27 lakh a year. If you, as a parent, need to have a dog in the fight and beat expansion, you want to contemplate developing your retirement fund.
Your child ought not need to think twice about their schooling as a result of outside factors, particularly when shrewd choices made on time can help you as a family to assume responsibility for their future.
It is simply reasonable to use the huge capability of the country’s development in Big Tech, internet business, biotechnology, clean energy, foundation, and medical services. The US has a lead in a considerable lot of these areas of the economy. You would you be able to decide to possess a piece of those, and reserve your Child’s dreams.
