The Nasdaq nosedive: Adversity or opportunity? | Value Research The tech-heavy US-based index’s roughly 29 per cent descent this year tests investors’ long-term outlook

The Nasdaq nosedive: Adversity or opportunity?

The tech-heavy US-based index's roughly 29 per cent descent this year tests investors' long-term outlook

The Nasdaq nosedive: Adversity or opportunity?

Nasdaq 100 is one of the most-recommended and preferred destinations for Indian equity investors because they offer geographical diversification.

In addition, investing in Nasdaq allows Indian investors to put their money in the highly-vaunted FAANG stocks, including Meta (Facebook), Amazon, Apple, Alphabet (Google) and Netflix.

That said, Nasdaq has fallen by around 29 per cent, as of December 8, 2022.

This means a Rs 1 lakh investment in Nasdaq at the beginning of the year would currently be around Rs 71,000 only!

So, why invest in Nasdaq?
Savvy investors always look at the long-term picture.

Sure, Nasdaq, like any other stock index, is volatile over shorter periods - as seen this year.

However, stock markets have historically done well in the long run.

Nasdaq is no exception.

Even today, if we look at the 10-year return of Nasdaq, it is still gunning out returns of over 16 per cent (as on November 30 2022).

What's more, Nasdaq returns for Indian investors stand at a very healthy 21 per cent, which means the original investment doubled in just three-and-a-half years!

Why Indian investors get higher returns
Because of rupee depreciation.

Let's explain this with a hypothetical situation:

  • In 2012, you invested in one Nasdaq unit for $1
  • The dollar value at the time is Rs 50
  • In 2022, you decide to withdraw your money when the dollar value is Rs 75
  • Therefore, one Nasdaq unit is equal to Rs 75
  • Even if Nasdaq delivers 0 per cent returns, you still make a Rs 25 profit

Thanks to rupee depreciation!

How much to invest in Nasdaq
The recent fall in Nasdaq means stocks of many global tech giants - such as Amazon, Apple and Alphabet - have started looking attractive.

But we'd want you to be on the safer side and invest just 20-30 per cent of your equity allocation in Nasdaq.

How to invest in Nasdaq
Option 1:
Most mutual funds investing in Nasdaq have resumed accepting fresh investments. They are:

To know which of these funds are recommended by our analysts, click here.

Please note these fund houses will stop accepting more investments if or when they exceed the $1 billion mark. To know the reason behind this, you may want to read this story.

Option 2: Liberalised Remittance Scheme (LRS)

LRS allows Indian residents to send up to US$2.5 lakh to another country for investing purposes each financial year.

Therefore, this route can be used to invest in Nasdaq through a foreign broker.

In fact, you can also join India INX, a fully-owned subsidiary of the BSE, to invest in Nasdaq from their portal itself!

And the process is completely online. Read this story to know how it works.

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