An Indian national planning to stay in the United States for at least the next decade has turned to the online community for advice on cross-border investing, specifically weighing the pros and cons of mutual fund investments in the U.S. versus India.
In a Reddit post that gained attention among fellow expatriates and financial enthusiasts, the individual sought guidance on where to prioritise long-term mutual fund investments, given their anticipated 10-year stay in the U.S. “I don’t foresee any plans to move out for at least the next 10 years,” the post began. “Given this situation, is it better to invest in mutual funds in the USA or India?”
The user also expressed interest in understanding the procedural aspects of investing in Indian mutual funds while residing abroad. “If I decide to start investing in mutual funds in India, what are the key steps and requirements I need to take care of before getting started?” the post continued. The query sparked discussions around currency risk, taxation, NRI investment regulations, and long-term financial planning. Many users highlighted that while U.S. mutual funds might offer more straightforward tax treatment and local benefits during the stay, Indian mutual funds could be advantageous for long-term rupee-denominated goals back home.
” Repatriation issues and taxes can kill you! “
The internet had some important suggestions for NRI. A user said, “US plz. It’s srightfoward , simple and manageable. Repatriation issues and taxes can kill you! Money in India stays in India and Money in US stays in US.” Another added, ” USA. It’s very difficult to get money out of India if you need it. And you’re opening yourself to exchange rate whims – everyone has opinions but no one has a crystal ball where they will move. I don’t have them handy, but there are ETFs you can invest in US which invest in India, if you really want to invest in India.”
Another claimed, “If you aren’t doing 401k, that’s the first start. It has tax benefits and many employers have matches. Also in US there are usually called ETFs, again your employer would have access to more ETFs than general public. If your employer doesn’t provide any you can look into IRAs, you are living here, earning here, paying tax here, I would first optimize here before looking at foreign investments.” A user suggested, “Don’t limit yourself to two countries. Just buy whatever is the regional equivalent of VT (globally diversified Index mutual fund / globally diversified Index ETF).”
“You will be subjected to PFIC rules if you invest in Indian mutual funds and hence could get tedious. You can invest in NIFTY ETFs to invest in Indian market but also keep in mind about the rupee devaluation. A good way is also to invest in VT (Vanguard Total World Index Fund ETF) which exposes to not just India but all of the international market. It has about 40% international exposure,” noted another user.