Investing in overseas assets? Read before taking a call

As part of this, he says, one can invest in property, equities, debt instruments and any other asset.

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"The risk per se is that you need to also manage with the foreign exchange risk. So, that's the downside that you have and you have to be careful," he explains.

Below is the verbatim transcript of the interview

Q: How can an individual invest overseas and what are the benefits as well as the risks associated with this?

A: Today, an individual can invest up to USD 200,000 in a financial year in any overseas asset. So, as part of this, you can invest in property, you can invest in equities, debt instruments and any other asset. In fact, you don't even need to go to RBI for approval before you make the investment.

There would be some bit of formalities when you do the funds transfer, some forms to be filled. You can also end up opening overseas bank accounts to be able to execute this process. The benefit of overseas investment is that it gives whole new set of assets for investors, it also gives you diversification. You have the US markets doing pretty well and many of us may have missed out on it so that is something that one could participate on.

Of course the risk per se is that you need to also manage with the foreign exchange risk. So, that's the downside that you have and you have to be careful. Today is a little better time with rupee having appreciated a little bit. This is a much better time to do it maybe than a month back.

Q: What about participating through some of the mutual funds who offer products where they invest abroad?

A: You can actually invest in any instrument so you can invest in mutual funds. Overseas, even the index funds are very popular so you could just be diversified in terms of the index. You can invest in blue-chips, you can do other emerging market investments, you can invest in the US. There are a whole lot of options that you can take advantage of.

Q: Investor can invest up to Rs 40,000 per month for about next 10 years. He has already have investments in properties, FDs, mutual funds and gold largely through demat. He has no liability except an EMI of Rs 15,000 for a second home. Can I invest overseas?

A: If you have taken care of your important needs like retirement, then maybe you can take a little bit off exposure to overseas investments. Otherwise, age profile wise I would rather be a little cautious. So hence, I would probably keep it a little limited to maybe 5% or even 8% of your overall portfolio. Indian debt instruments are good. You get good returns if you make deposits and bonds.

So, one could probably use blue-chip dividend yield stocks where some of the companies actually give you very attractive dividend yields overseas. You could probably invest in stocks like that. You would need to open a trading account. There are some Indian companies which have tie-ups with some of the global houses. You would have to have that platform to be able to then invest in some of these stocks. You could also look at index funds as one option.