06 Sep How to Invest in India
The Indian economy bears the signs of being one of the more promising opportunities in the world. Whether you are a non-resident Indian looking to invest back home for retirement, or whether you just want to diversify your investment portfolio, there could be something that fits your criteria.
But before you just jump in and invest in India, it is important that you understand exactly how to invest in India and what the pros and cons are. We take a look at just this, below.
An Overview of India’s Economy
India is a land of many opportunities. The Indian economy is quite versatile and it’s exactly that versatility that gives it such an edge. From highly specialized technology-based industries down to good old fashioned farming, they provide all kinds of goods and services.
As of 2019, India has a gross domestic product (GDP) of $3 trillion which typically grows around 6.8% (GDP real growth rate for 2019). They have an unemployment rate of only 6.1% and their inflation rate stands at 3.18%. According to the World Bank India has the third-largest higher education system on the planet (behind the U.S. and China). Couple that with the fact that about half of the Indian population is under the age of 25 and you’ll quickly realize why the U.S. Census Bureau believes India will have the largest workforce in the year 2025. The Indian economy has its challenges but it definitely holds great potential. Let’s have a look.
3 Benefits and Risks of Investing in India
Purchasing land in India is a common way of investing. But let’s delve deeper into the Indian economy. Here are some interesting benefits and risks to investing your money there. Considering these will definitely give you more insight on how to invest in India.
India has a relatively young demographic profile. About 65% of its population is under the age of 35. Its economic growth should be fueled by a young and growing workforce (if we assume that its education system effectively teaches them how to contribute to the economy).
Strong Economic Growth
India has a strong growth forecast for the coming years. It holds a significant presence in the information technology and business process outsourcing industries. These two are some of the largest sectors in the world and both enjoy considerable demand which points to a healthy growth forecast.
India has received freedom from the British government more than 50 years ago and they have maintained a stable democratic government. Their current prime minister, Narendra Modi, was elected in 2014 and has focused much on improving their economy.
India is situated in an unstable area of the world which causes some political problems. It includes issues like terrorism and culture-based wars. It doesn’t really affect their economy that significantly, but it poses some unique risks for certain investors.
The Best Ways to Invest in India
Now that you have some context, let’s get down to business. Let’s look at the most common ways to invest in India.
Exchange-Traded Funds (ETFs) have been around since 1992 and has since grown globally in size and number to over 4,000 (it accounts for about $3 trillion in assets).
Here is a list of Indian ETF’s you can possibly consider.
- WisdomTree India Earnings Fund ETF (NYSE: EPI)
- iPath MSCI India Index ETN (NYSE: INP)
- Invesco India Portfolio Etf (NYSE: PIN)
- iShares S&P India Nifty 50 Index Fund (NASDAQ: INDY)
- Market Vectors India Small-Cap Index ETF (NYSE: SCIF)
Bombay Stock Exchange
The Bombay Stock Exchange (BSE) is Asia’s first stock exchange. It is based in Mumbai and has been running since 1875. It lists close to 6,000 companies and is, therefore, one of the largest exchanges in the world. You can buy and sell the stocks that trade on its platform. You will, however, have to work through a registered broker to trade on the BSE.
National Stock Exchange of India
The National Stock Exchange of India (NSE) was founded in 1992. It became the first exchange in India to adopt fully automated electronic trading practices in 2016. They trade mainly in wholesale debt, equity and the popular NIFTY 50 Index. In 2016 they have acquired a market capitalization of $1.4 trillion.
American Depository Receipts
American Depository Receipts (ADR) are easy ways to invest money into the Indian economy. You follow dollar pricing structures without having to use foreign brokers. You don’t own a stock with an ADR but you own the right to that stock. This makes it possible for you to invest in the Indian economy without having to go through the admin of investing in actual stock.
Here is a list of available ADRs.
- Tata Motors Limited (NYSE: TTM)
- ICICI Bank Limited (NYSE: IBN)
- Dr. Reddy’s Laboratories Limited (NYSE: RDY)
- Infosys Ltd. (NASDAQ: INFY)
- Rediff.com India Limited (NASDAQ: REDF)
3 Options for Investing in India
You might already own an investment property in India and are still looking for different ways to diversify your investment portfolio. Perhaps you are still looking for more ways to invest in the Indian economy like investment funds. Here are three more options to consider when wondering how to invest in India.
iShares India 50
This is an investment in the 50 largest companies in India. It’s also called the Nifty 50. This ETF exposes you to $1.23 billion of assets with a diversified risk profile. Your money is invested in many types of industries like financial services, automotive, information technology, consumer goods, mining, energy, pharmaceutical, shipping, and the list continues. This ETF exposes you to a diversified opportunity of investment into one of the most promising economies in the world.
WisdomTree India Earnings
WisdomTree India Earnings strives to offer you an alternative to the traditional market capitalization-weighted ETFs. They hold Indian companies of all sizes and expose you to other types of opportunities as well (and not just the usual larger companies). About a third of its pool of investments are in medium to small-sized market capitalizations.
The India Fund is one of the oldest options available in the country. It is also a bit different than the rest since it can possibly trade at a significant premium or discount. This means you can potentially buy the investment at a price which is lower than its net asset value. So too would you possibly be able to sell it at a price higher than its net asset value (if the market places a high demand on it).
Personal Loans for Investing in India
Now you know a bit more about how to invest in India and most probably want to make use of this opportunity. But what do you do if you don’t have enough money to invest? Have you considered a personal loan for investment?
You can use a personal loan for whatever you want. It usually is an unsecured form of debt, which means you don’t have to submit something as security for the loan. Even a foreigner like a Non-resident Indian (NRI) can qualify for a personal loan in the U.S.
Stilt offers personal loans for your consideration. Getting a personal loan from Stilt could even be better than getting a loan from an Indian bank. Stilt’s personal loans start at an APR of 7.99% and will depend on your application for credit. Foreign nationals are welcome to apply. This is how it works.
1. Submit an Application
Apply online for a loan amount of up to $25,000. Make sure you comply with the basic eligibility requirements and submit your best possible application.
2. Receive an Offer
Someone will contact you within 24 hours of your application. Please supply any additional information if it is required. More information helps to get you the best possible personal loan offer. Soon after you will receive your offer with a promissory note. Sign and return that note if you wish to accept the loan.
3. Start Making Payments
Your loan is disbursed into your U.S. bank account within 2 to 3 business days. Now you just need to set up your payment method. You can do it online and an autopay option will settle your monthly payment automatically.
It’s that easy!
India is a country that holds many opportunities. It has a young growing workforce and a large education system focused on equipping its workforce. It holds great potential for economic growth. You can capitalize on that growth by investing into the Indian economy. Use the information provided here on how to invest in India to make your own personal investments.
If you don’t have money available you can even use a loan to invest in India. You can find personal loans for investment online and even foreign nationals living in The U.S. may qualify. Apply today for a personal loan and invest in India’s booming economy.