Everything You Need To Know About Global Investing Qa With Neil Borate

TITLE: Everything You Need to Know About Global Investing | Q&A with Neil Borate CHANNEL: Thefynprint DATE: 2026-05-30 ---TRANSCRIPT--- Hi guys, here’s me answering the top 10 questions on global investing that have been posted on our WhatsApp group. Number one, why invest outside India? You should invest outside India mainly for three reasons. Number one, India is just 3% of the global market. By ignoring the world, you are ignoring 97% of the total world market. Number two, you need a hedge against a falling rupee. The rupee to the dollar at independence was 3.3. It is around 95 today and you will have expenditures overseas in dollars. Apart from that, your own expenditures in India will be influenced by the rupee dollar exchange rate. So you need to have some money outside. Number three, India does not have any strong AI companies. India is out of the AI revolution and India has been hit hard by the commodities upcycle uh especially oil. You need a hedge against that. How should you invest outside India? Well, you have three main routes. Number one, you can invest in mutual funds which in turn invest outside India. There is a list of such feeder funds that we put out on the fine print. But those funds have been restricted by an RBI limit. So when each fund hits its limit, it stops accepting money. Very recently, Kotak Mutual fund stopped accepting fresh money in its schemes. Access has imposed a cap of rupees 1 lakh per month. Edelwise has imposed a cap of rupees 5,000 per day. So by and large feeder funds will not allow you to meaningfully invest outside India. Then there are ETFs which are listed in India but which invest outside. For example the Mutilos one NASDAQ ETF. In that case because they are ETFs they can’t stop accepting money. You can invest in them by buying units on the stock exchange but they trade at a premium to the NAV which means you are paying an extra 20% just to invest outside India. Second option is to invest via Gift City. There are many funds in Gift City, both Aifs with starting price of $15 and retail funds which start at $5,000. And number three, you can invest directly by opening an a broking account in the US and directly buying US ETFs or USIDS ETFs which are located in Europe. Should you invest through gift city? Answer unfortunately is no because G city taxation is not good for you. The short-term capital gains tax in G city is 42.7%. Yes, you heard that right, 42.7%. The long-term capital gains tax in a G city fund is 14.95%. This is much more than what you would pay if you directly invested outside India. [snorts] If you directly invest in an ETF that’s listed in the United States, then you would pay a short-term capital gains tax at your slab rate, which could be 20% or 30%. And a long-term capital gains tax of 12.5%. In either case, you are paying less tax than Gib City. Secondly, in case of set off and carry forward, this is available to you if you directly invest in US ETFs or stocks. you can adjust those gains and losses against your Indian mutual funds and stocks gains and losses. You can’t do that with Gift City funds. Now people say that compliance is easier, tax filing is easier with GIF city. Unfortunately, there is no clarity on this. Although one mutual fund DSP says that you don’t need to file schedule FA which is the main document for foreign asset reporting. Another mutual fund Parak Parik says you may still need to file it even though you’re going via GIF city. So unfortunately, Gib City right now is just not a good deal for you. Isn’t foreign investing filled with tax compliance? I would say no, not anymore. So yes, you have to disclose your foreign assets in your income tax return by filing schedule FA and if applicable, then schedule FSI and TR also. But most foreign investing platforms provide a prefilled schedule FA. you have to just attach it to your income tax return and the same goes for the other schedules as well. This was a big concern many years earlier but over periods of time government has relaxed its regulations around this. Isn’t foreign investing filled with tax compliance? I would say no, not anymore. So yes, you have to disclose your foreign assets in your income tax return by filing schedule FA and if applicable then schedule. Isn’t US estate tax a problem if you invest overseas? Yes, it is if you have assets in the United States above $60,000 in value at the time of your passing because remember estate tax affects your family on your death. It does not affect you or your family in your lifetime. How to get around this? It’s very simple. You should invest through USITs ETFs. These are ETFs which are doiciled in Europe in countries like Ireland or Luxembourg and they fall outside the ambit of US estate tax. How to find these usage ETFs? How to actually invest? We will help you with all of that at the fine print. Isn’t the US very expensive to invest in right now? Is there an AI bubble happening? Answer is yes. US is expensive relative to its history but AI is also very real and the earnings of those companies are growing rapidly. So in our framework at the fine print we are underweight the US relative to its size in the world index but we are not zero weight the US. We think participating in AI is important. So yes, US is expensive but you can’t ignore it completely. If you would like to know more about our framework, where else do we invest? Please schedule a call with us at the fine print. Which country do I invest in? Well, in our framework at the fine print, we have three layers. We have a base layer which is built on the all country world index. There we are country neutral. emerging market which third we have a tactical layer where certain themes that we are bullish on we have picked to give you that additional return that alpha. So we don’t pick countries in the fine print. We pick broad trends across countries through lowcost ETFs and we try to build a portfolio that is as low risk as possible. How are gift city funds doing? Well, unfortunately not very well. Almost every gift city fund is underperforming it the MSCI all country world index which is a standard benchmark. Let’s take a couple of prominent examples. So DSP mutual fund launched its DSP global equity fund um somewhere around August of last year and it is down around 12%. It has given much lower returns than the Aqui. Another example, Parag Parik PMS. This is not a fund. It’s a portfolio management service. But that too has given lower returns than the acqu city funds, PMSs, AIFs, etc. All on our gift outbound funds tracker available on the fineprint.com. How much will I be taxed if I invest overseas? Answer is in case of short-term capital gains, you are taxed at slab rate for a 2-year holding period or less. However, if you hold for more than 2 years, then you are taxed at the long-term capital gains tax rate, which is 12.5%. It is the same LTCG rate as the tax on Indian stocks and mutual funds. What is more is that you can do set off and carry forward. You can adjust your gains and losses on your foreign ETFs and stocks against your Indian mutual funds and stocks. Finally, if you have a if you have made a big gain on your foreign ETFs, you can very much use the tax deductions available in India for capital gains such as section 54F where you reinvest the proceeds of any asset including a foreign ETF into a house. So, your foreign investments can very much buy you that dream house. What happens to my money if the broker goes bankrupt? Well, in the US there is no concept of a separate DMAT account. So, unfortunately, a broker bankruptcy is a big deal. Now, there are certain safeguards. Typically, your stocks are held with a custodian that the broker has contracted and the custodian might survive, might be stable even if the broker goes bankrupt. The other thing is there is something called SIPC insurance up to $500,000 that kicks in from the US uh from the US administration in case something happens to your broker. But this event is a rarity. Should it pass, it can lead to a lot of inconvenience. So make sure you go with a large listed stable broker. How do I get started with global investing? Well, first and foremost, figure out why you are investing overseas. Is it for the short term? Is it for the long term? With any equity investment, long-term is best. Number two, figure out how you want to do it. Do you want to do it through a mutual fund? Do you want to do it through gift city? Do you want to do it through direct investing in US stocks and ETFs? Number three, once you’ve figured out your route of doing this, check the applicable tax. Does this make sense for you? Are you in the lower tax bracket compared to let’s say what a gift city fund will deduct? Make sure you’re comfortable with it. Number four, check the tax compliance you need to do. Typically, in cases like gift city funds or in cases like overseas ETFs or direct stocks, you may need to file schedule FA. This is for sure in case of direct ETFs and stocks. With GIF city, it’s a bit debated, but make sure you understand what schedule FA is. Make sure you file it. Otherwise, you will get an income tax notice. Finally, make sure that you pick the right broker and platform. This can really eat into your returns. So, um go for something that has low brokerage, low forex transaction costs, but most importantly on of all is built on a US listed broker that is large, that is solid, that’s not going to go bank up bankrupt. Your money first and foremost needs to be safe. Which broker should I invest in? Well, there are a lot of players. Let’s take uh the three or four very popular ones. So, IND Money for example, vested finance for example, Basa for example. How do you choose between them? The first and foremost thing you should look at is who is the underlying US broker? A lot of these companies in India, they are just layers on an underlying US broker. How stable is that company which is underneath? How big is it? Because in the US there is no concept of a separate DMAT account. If the broker fails, you are massively at risk. So please check who the underlying broker is. For example, one of the oldest brokers in India is Interactive Brokers, which is a US broker with a presence in India. It’s a 50-year-old company listed in the US. So there you might find some comfort. Some of the other players are based on lesserk known US brokers like Drive Wealth or Alpaka or New Trade. They may or may not be fine, but you have to figure out your own comfort with a small obscure broker compared to a large 50-year-old company and make sure you check who that underlying broker is. Second thing you should check is what the brokerage rates are. Obviously, you don’t want to pay too much in commissions. Now in general most platforms charge somewhere between 0.25% to.1% so it will not take a big bite out of your portfolio but check this. Third thing you should check is the forex transaction rate. You may not realize this but most brokers are tie-ups with banks where they take a cut of your forex charges. Let’s say today’s exchange rate is 95 rupees and the bank is converting your money at 96 rupees. Now this one rupee is getting split between the broker and the bank. You don’t even know about it. But you will see you will know what that spread is. So any broker which has a big spread compared to the midmarket rate the Google rate that probably is a no no. Make sure you check that. Thanks for watching [music] guys. Um if you have any feedback or if you have any questions please drop them in the comments. I will take them up in the next video or you can join our community. So, if you’d like to join, please go to the fineprint.com [music] and subscribe.