What are Global Investments?

It is a type of investment that an investor has abroad. A global portfolio investment can include a variety of different assets held in foreign countries, including bonds, stocks, and cash equivalents. They can be managed by finance professionals or directly held by an investor.

Most global portfolio investments are passively held by the investor. Though their liquidity does depend on the volatility of the foreign market in which they are held, global portfolio investments can be very liquid.

Liberalised Remittance Scheme (LRS)

The Liberalised Remittance Scheme (LRS) of the Reserve Bank of India (RBI) allows resident individuals to remit a certain amount of money during a financial year to another country for investment and expenditure.

According to the prevailing regulations, resident individuals may remit up to $250,000 per financial year. This money can be used to pay expenses related to travelling (private or for business), medical treatment, studying, gifts and donations, maintenance of close relatives and so on.

Apart from this, the remitted amount can also be invested in shares, debt instruments, and be used to buy immovable properties in overseas market. Individuals can also open, maintain and hold foreign currency accounts with banks outside India for carrying out transactions permitted under the scheme.

Advantages of Global Investments

• Portfolio Diversification
• Risk Diversification
• Geographical Diversification
• Benefit from Exchange Rate
• Access to a Bigger Market
• Liquidity

Taxation

When Indian residents invest in the stock markets in India, they are aware of the tax implications. However, when the investment is made in the stock markets of the US, what will be the tax implication? How will it be taxed and will there be any exemptions. To understand tax implications, it is imperative to understand the type of gains from the investment in stock. There are the following gains:

• Dividends
• Capital Gains on sale