Today, one can certainly say that we live in a world without rigid boundaries. Be it for education or work, many Indians transcend geographical boundaries, and find the best opportunities wherever they might be. Regardless of whether it is New York, London, Dubai, Melbourne, or any other time zone, we find Indians constantly on the move and thriving in innumerable places across the globe. So while time and space have ceased to be barriers in your professional life, don’t you think the same should apply to your choices as an investor too? Then to truly embrace your identity as a global citizen, here’s what you need to know, as an NRI, to start investing like one.

• Be aware of restrictions:

The first thing you need to do is identify the restrictions of being a foreign investor. This will help you estimate the limits of your ventures and subsequently, the most optimal ways to go about reaping the highest profits. Most commonly, you will face restrictions on the type of investments you can make and the maximum amount you can invest; but this can vary depending on where you are located. 

• Understanding your tax implications:

Apart from being aware of your restrictions, another key factor that you have to consider while making investments are the particular tax implications. In this case, always be aware of the schematic for taxation in whichever location you may be in, as well as wherever you are making investments. Make sure you have a list of all the countries which have signed a Double Tax Avoidance Agreement (DTAA) with India, as this could allow you to reduce your tax liability or avoid it altogether in one of the countries. Here, it is good to consult a professional to ensure that you don’t make any costly mistakes. 

• Risks of cross-border investing:

Never forget to calculate the risks of investing across borders. As a global investor, you will be investing in countries whose markets are very different from your own. Overseas companies are subject to the laws and policies of their local geographies as well as other existing or forthcoming trade agreements. Keeping track of all these changes becomes quite complex if you have investments in more than one country. So always remember to work with a financial planner having cross-border expertise, who is adept in these matters and can help you make the best choices in relation to locations of your investments.

• Don’t forget about exchange rates:

Investing like a global citizen means you will be making purchases in numerous countries, and as an outcome of this, in multiple currencies. In that case, all profits you receive are subjected to the currency exchange rate. The fluctuation in price as a factor of the exchange rate at the time of purchasing and selling stock must be taken into account. Let’s say that you purchase some stock when the currency exchange rate was $1 = INR 68 and happen to sell it when the rate is $1 = INR 62, then you automatically lose 8.8% due to changes in the exchange rate. 

• Think about diversification and liquidity:

Diversification is an elegant way to mitigate the risk associated with your portfolio. Apart from ensuring that all your eggs aren’t in one basket, it can also be used to distribute your assets across geographies and currencies. In fact, owning assets in different currencies works in your favour as you can always gain from currency depreciation; especially if you need to utilise funds back home in India. Additionally, you may also want to consider maintaining a significant amount of liquid assets as they can be extremely beneficial during emergencies. Doing so becomes important as you may be constantly on the move, and can’t predict when you may have an immediate requirement for cash.

Being an NRI and investing like a global citizen can be extremely fruitful, giving you access to many opportunities that you may not have had as an Indian resident. However, undertaking this effectively is not as easy as it sounds. Apart from the assets and countries you invest in, your success also depends on the risks you’re willing to take and how well you’ve planned for the same. Then to start investing like a global citizen you should work with advisors who are competent in risks, laws, and regulations at global scale.