Investing in the US stock market is more than just a game of diversification


The US stock market provides access to investors around the world to diversify their investment portfolios. From Apple, Tesla and Microsoft to many other global giants whose products and services are used in India, the way to participate in the company’s growth as a financial partner does not exist in the country. It is simply because Amazon, Google and many others are not listed on Indian stock exchanges.

One of the main reasons to diversify a portfolio is to provide the benefit of diversification. When your stocks or other investments are not exposed to a single asset class or economy, the risks are hedged to some degree.

India and other emerging markets continue to attract great interest from international investors. However, the geographic diversification of the portfolio adds a layer of protection and the possibility of high return with little risk. Think again, if you think your investment portfolio in India is properly diversified across market capitalization, industries and asset classes, then what could be missing?

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Diversification cannot be fully achieved without exposure to many geographies. Country risk is one of the greatest dangers for a long-term portfolio.

When it comes to profiting from the stock market, there should be no prejudice about the country of origin. A portfolio with exposure to more than one economy will struggle more than a portfolio with well-diversified global holdings.

And, if you’re ready to diversify your portfolio with international equities, what better approach than to consider investing in the United States? The US stock market has all the necessary components in place, including the power of its $20 trillion economy, the presence on their stock exchanges of multinational corporations from Holland, Japan and other developed countries, a high volume of trading , a large market capitalization of shares, which provides liquidity, open but strict financial market regulation and, above all, affordable investment options.

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In the longer term, the correlation between the US and Indian economies is weak. This means that the two economies do not necessarily evolve in tandem. For a high risk-adjusted return, it is better to be diversified in both economies by participating in the capital of the main companies that derive the profits from these economies.

You can hold shares of FAANG stocks – Facebook (now META), Amazon, Apple, Netflix and Google – as well as other major US companies like Microsoft. Start adding US stocks to your portfolio to reap the long-term benefits. Investing in the US stock market is more than just a game of diversification as it helps you own the brands you use in daily life.


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