Investing in the US vs. Elsewhere?
Many times questions arise in our minds like:
The Chinese economy is booming...why not invest there? Japan is going into recession...oh my god let me close my international fund! We get 9% interest in India on regular fixed deposits why not just put the damn money in there? I hate the american taxation system and the near zero savings bank interest rates....why should I even invest in this country that does not care about money growth?!
It is very difficult to justify why only one of the above must be done versus the others. Ideally if there was a mathematical model which would predict the future of every stock, bond in every country we could just move money into that just before it takes off and be done with it!
However speculation comes with risk. There is no guarantee that a certain instrument of money will do well just because it did well in the past. The recent recessions that occurred in 2002 and 2009 were not predicted by any model. That proves that the market can be unpredictable and highly volatile.
So the keyword here is DIVERSIFICATION like the old saying goes don't put all your eggs in one basket.
Investing outside of the US might give added growth but note with currency fluctuations, difficulty of transferring money back and forth, and double taxation of earnings (FBAR) one could quickly loose the gains from money invested abroad. We leave it to chance.
So the takeaway here is to invest in the US first if you plan to lead a major part of your life here, and to some extent abroad to pay for family expenses, spend during visits to home countries, real estate purchases abroad, etc. The advantage of the US economy is Tax Exemptions on the investments which we will talk about soon! So we get to keep all the growth without having to pay 10-30% taxes on them depending on your income and tax slabs.
So the keyword here is DIVERSIFICATION like the old saying goes don't put all your eggs in one basket.
Investing outside of the US might give added growth but note with currency fluctuations, difficulty of transferring money back and forth, and double taxation of earnings (FBAR) one could quickly loose the gains from money invested abroad. We leave it to chance.
So the takeaway here is to invest in the US first if you plan to lead a major part of your life here, and to some extent abroad to pay for family expenses, spend during visits to home countries, real estate purchases abroad, etc. The advantage of the US economy is Tax Exemptions on the investments which we will talk about soon! So we get to keep all the growth without having to pay 10-30% taxes on them depending on your income and tax slabs.
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