Usually, diversification is considered the first rule of investing. It reduces risk by spreading investments across different assets or markets. Nowadays, several investors are going global and investing in foreign stocks, like US equities. By doing so, they gain exposure to different economies, which reduces the risk tied to a single country’s economic fluctuations.

For example, say, the Indian economy faces a slowdown. Now, having investments in different sectors or company sizes may still affect your portfolio. This is because all local assets are linked to the same economy.

Therefore, to address this risk, investors are diversifying internationally, especially into US equities. This approach provides additional stability as different economies may not face downturns simultaneously. For more clarity, let’s check out the top 4 reasons why you should invest in foreign stocks in 2025.

• By investing in foreign stocks (especially US equities), you get exposure to the world’s largest companies like Netflix, Meta, Alphabet, Apple, and Microsoft. Such broader investment opportunities are not available in India.
• Generally, fundamentally strong US stocks remain stable and even carry a lower correlation to Indian markets.
• By investing in US stocks, you can also hedge against the Indian Rupee's depreciation.
• Foreign investments can increase your returns through both stock price gains and currency advantages.

Several Indians spend a lot of money on brands like Amazon, Netflix, and Samsung. They even use platforms like YouTube, Facebook, Instagram, and Twitter daily. However, despite spending so much time and money on these global companies, most Indian investors don’t invest in their stocks.

India is the fifth largest economy in the world, but still, many global investment opportunities (especially in large technology and consumer companies) are not available locally. Countries like the US are home to some of the world's biggest companies. A few are often far larger than the biggest Indian firms.

By investing in foreign stocks of this size, investors can benefit from market trends and opportunities that are not accessible through Indian stocks alone.

The US stock market is generally considered less volatile. By investing in US stocks, you can easily diversify your portfolio by assuming minimal risk. Interestingly, popular US market indexes like the S&P 500 and NASDAQ 100, have a low correlation with Indian markets (less than 15%).

This means that when Indian markets are volatile, US markets remain more stable. In such a scenario, a portfolio with assets from both U.S. and Indian markets can achieve better stability, as losses in one market may be offset by gains in another.

Additionally, when compared to India, US investors have access to a wider range of treasury products and low-cost ETFs (expense ratios as low as 0.03%). This makes it cheaper to diversify abroad.

The US dollar is considered one of the safest currencies in the world. Historically, many events have shown that the US economy consistently bounces back stronger from tough phases. On the other hand, the Indian Rupee (INR) is more vulnerable to external factors like:

• Rising oil prices
• Political instability
• Poor monsoons

These factors cause the INR to depreciate against the US dollar. Additionally, inflation rates in India are higher than in developed countries (like the US), which leads to further depreciation. In such a case, investing in US stocks acts as a “hedge” against the depreciation of INR.

If the INR loses value compared to the U.S. Dollar, investments in U.S. stocks protect your wealth. That’s because as the value of the dollar rises, the worth of your U.S. investments also increases when converted back to INR.

Ideally, a perfect investment strategy should consider global factors like social, political, and economic changes. In times to come, experts are predicting a multi-polar world. For the unaware, it means power and influence are distributed among multiple countries rather than being dominated by a single superpower or a few powerful nations.

This concept is different from a unipolar world, where one nation holds most of the power,

Therefore, as a modern investor, you should prefer investing in foreign stocks and benefit from growth in different parts of the world. Additionally, you can also protect yourself from local risks.
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