By - shaitani-iblis
I read here recently that you're only allowed to use one bank in a given financial year for transfers under LRS, or else it falls foul of FEMA. So for this year atleast, you'll have stick to icici.
And honestly the 1% or so you lose in transfer is fairly insignificant in the larger scheme of things for a long term investor. Even the day to day forex movements are often in that range, and Noone can really time that all that well, even if they wanted to. And if you aren't looking long term, maybe direct foreign investment is a bad idea - you get none of the benefits (compared to investing in the foreign finds domiciled in India), with all of the hassles.
>I read here recently that you're only allowed to use one bank in a given financial year for transfers under LRS, or else it falls foul of FEMA. So for this year atleast, you'll have stick to icici.
Sir source for this please
I transferred in January when I received my bonus , so technically this is a different financial year and not a problem .
I am looking for ways to transfer money on a monthly basis instead of one-time. Looking for a solution in which I can transfer around 20/30 k per month . The one time fees of 1k for each transfer is a dampner
There aren't any cheap ways of transferring money out for investment purpose. The usual cheaper ways like wise (Transfer Wise) don't support it.
So until you find something like that (which I doubt currently exists) the best is just accumulate the sum for about 6 MO ths or so and then do a one time transfer.
I give a rough rule of thumb. If you want to invest in USD assets, think of at least 1K per period - smaller amounts end up having a larger share of the conversion costs.
BTW, IndMoney claims that they have lower markup and fees. Have you asked them?
makes sense re: the ticket size. my employer doesn't let me use any international brokerage other than IBKR
>my employer doesn't let me use any international brokerage other than IBKR
~~Why does your employer have a say in your choice of brokerage?~~
Edit: Never mind. Found the answer in a comment below:
>I work for a finance firm and also have access to material non public information. Hence I have restrictions. Only allowed to operate on IBKR.
So, i received this email from IDFC bank saying that they have 0 charges for forex transactions. Will check them out. If true, then definitely sounds better than other banks
Can't we go through INDmoney etc? Their rates seem decent and it's quite seamless to invest in US ETFs that way. I have bought VOO using INDMoney.
Am I missing something? Is it risky going through these channels?
I use INDmoney. They charge 1.25% for converting INR to USD. Transfer happens immediately.
Exactly. Idk why people are considering forex banks etc
My firm where I am employed only lets us use interactive brokers for international investments
How does your firm prevent you from independently opening another brokerage account? Never heard of such a restriction in employment contracts.
That aside, IBKR > Ind/Vested/etc any day.
I work for a finance firm and also have access to material non public information. Hence I have restrictions.
Only allowed to operate on IBKR. I am sure others on this forum will be in a similar situation
Got it. So are you considered a finance professional on IBKR and if so how much does it cost you to use IBKR?
I believe that I am considered a retail investor as it’s a personal account. The account is free for me but have to pay 1$ or 1% trade value as brokerage for every transaction
Can you please enlist the cons of INDmoney? I'm using it extensively as the only channel for my US investments. Why do you prefer IBKR over it. I'm really new to this space. Please help
Depends on each persons requirements but reasons I prefer IBKR over Ind and others primarily comes down to the fact that IBKR is a well established broker with a full service offering. Ind/Vested etc are startups piggy backing off another startup DriveWealth and offers a miniscule selection of only US instruments in comparison. I have a quick summary of broker options for Indian residents here - http://theglobalinvestor.in
More reading: https://www.bankeronwheels.com/how-to-choose-a-safe-stock-broker/
Thanks this helps a lot. But risk wise is IND okay? Or still there's a risk
I would look at the site fully.
Do you also talk about Ireland domiciled funds, and them being better option than US funds due to estate tax issues?
That is covered very well here: https://www.bogleheads.org/wiki/Nonresident\_alien\_investors\_and\_Ireland\_domiciled\_ETFs
IBKR will be more cost effective and is a more established platform - are the only pros I can think of
What is IBKR?
Invest in lump sums, create recurring deposits until you have a big amount and invest in lump sum to save on transaction fees..
Another thing is buy Irish domiciled etf , they have better taxation, accumulating etfs are like growth mutual funds of India where you don’t have to pay taxes on dividends as they are automatically reinvested before you get them… they also don’t have the inheritance tax which us domiciled ones have…
Here’s 2 Irish equivalent of popular usa etfs:
S&P 500 (SPY / VOO): VUSA
Vanguard Total World Stock Market ETF (VT / VTWAX) : VWRL
It's better to invest in accumulating dividend ETFs then. Less tax compliance burden. So CSPX instead of VUSA, etc.
Exactly in the lines of VUSD / VWRA
Thanks for the tip on using Irish ETFs
>Irish domiciled etf
How to invest in them from India?
Interactive brokers -> EU Market access -> buy through London / Frankfurt stock exchange
Use justetf website to find etfs you want, they mostly have info of ucits etf
What is the minimum balance or minimum value of trade requires with IB? What about other charges? Are they a brokerage company like drivewealth?
What is ucits?
If you are looking at broad market indexes and nothing fancy then Navis FoF which buys Vanguarda VTI ETF is a hassle free option. You can also time your entries/exits as the NAV reflects US Market price of previous day.
Yes, I am current using this ( navi VTI) and Kotak nasdaq 100 for my international investments.
One catch can be that the tax laws around maintaining these can become pretty complex if once decides to move to another country (especially USA or Canada). As opposed to holding ETFs with a US broker.
In such a situation you can always redeem in India and open directly from US which will be your local brokerage at that time.
Consider using a platform like Vested, their currency exchange rates are better than the standard bank rates, they will facilitate opening up an account with SBM - State Bank of Mauritius - which has a license to operate in India..
Vested is a zero brokerage securities transaction system.. also uses Interactive Brokers under the hood as well i think..
What are some charges/expenses in vested
It's a discount broker so no charges on plain equity buy sell transactions, don't know about bonds.. you can buy traditional shares BTW. Nominal charges for money transfers, once a year free money transfer out..
My firm only lets us use interactive brokers for international investments
And which bank gives best rates to transfer ? If anyone has any idea
ICICI has one of the worst forex rates.
Look at the TT buying rate while sending INR out, TT selling rate when getting INR back. You can also try xe, wise, ofx, remitly, moneygram etc. for Wire/TT transfers - they may offer rates even better than banks.
Indian Overseas Bank almost always has the best rates in India among banks.
PNB, SBI, BoB are second best most of the times. Seems like PNB's rate is even better than IOB, need to follow up with them. In case it is better and they have online remittance facility then PNB would be a no brainer.
See private banks as well for reference
Trade USD.INR Forex pair to convert INR to USD, trade INR.USD Forex pair to convert USD to INR on InteractiveBrokers itself using IB's Trader Workstation. The rates here would be even better. Not sure about FEMA rules in this case though.
\#2 is not possible for various reasons. Can't fund IBKR Global with INR as its not allowed per RBI/FEMA.
Do you know if IOB has an online remit facility? Do I need to open an account with them to remit? TIA.
I have a savings bank account with IOB just for the purpose of forex transfer. I have only availed incoming wire transfers so I am not sure if IOB supports online outward wire transfer requests. My guess would be they don't given their bad netbanking infra.
Still you can call on 044-285-10003 to enquire about the online facility. This is a phone number specific to outward wire transfer.
Thanks a lot, will check these out
Why do you believe in your premise?
Because there are no middlemen.. the AMCs will be charging forex fees (built into the NAV) and have their own AUM fees . And the actual ETFs will have better liquidity
Similar situation as yours - access person
(portfolio manager to be specific), who is supposed to stick to a limited array of brokers due to compliance rules, so Interactive Brokers is my choice.
In the past, I have been using Interactive Brokers to build the international section of my personal portfolio. Have been doing this for the past couple of years - usually do two fx transfers an year, one around bonus, and the other around September / October if there is a savings after all SIPs and stuff. I don't deploy all of it at one go, I buy a specific set every month / alternate month.
However, with the introduction of more international index funds (this is specifically a 2022 thing), I've shaken things up a bit. US portion is now taken care of by SIPs. Index funds are also tax efficient because of dividend reinvesting pre taxes.
There's also the fact that any traded instruments, including an ETF, I need to hold for 60 days. But the index funds are open ended mutual funds, so you could technically get out the very next day, if you see a really bad sentiment souring etc.
Debt portion of it, no good international debt funds in India - so it will have to go via interactive brokers. But for equity, I will move things onshore as and when good instruments open up.
Thanks, what are some good debt options on IBKR? if you don't mind explaining
Sorry, cannot give investment advice, esp with specific instruments - would be a violation.
let me rephrase the questions -what are the available debt options for indians on ibkr? and which ones are the most subscribed
Why is investing in Kotak or Motilal Oswal Nasdaq 100 Fof is not a good way
Vanguard ETFs and other available on the IBKR platform have lower tracking error
they also have lower fees \[ Kotak and MO are middlemen with additional AUM fees\]
options available in the indian market are very limited. IBKR will have everything that's out there