If I had $1000 to invest, am I better off investing it in the US, in India, or a mix of the two?
I am an Indian citizen working in the US, with the option of investing in US index funds or sending money back to India to invest in Indian mutual funds. At the moment, I intend to return to India in 5-10 years.
What's the better option for a long-term saving strategy?
Key factors I have thought about making the decision:
- Currency conversion loss of 1% converting USD to INR
- Currency Power: Historical depreciation of INR against USD
- Bank deposit Interest Rates: 1.8% in US savings accounts vs. 7% in India
- Inflation rates: 2% in US vs 5% in India
- Index/Mutual fund returns: ~15% in India vs ~10% US (5-yr avg based on S&P 500 vs Axis Long Term Equity fund)
I am unable to make a clear decision since:
- I don't understand how the factors above relate to each other
- I don't have a framework for comparing the two investments