Saving for your child’s foreign education? Invest in US index funds
Thanks to remarkable progress in science and technology, the US has witnessed unprecedented growth in the recent past. It is no surprise that the S&P 500, an index of the top 500 publicly traded US companies is weighted towards prominent American tech giants. Furthermore, looking at the S&P 500 from 2001 to 2020, the average US stock market return for the last 20 years is around 7.45 percent.
So, if you invested $100 in the S&P 500 at the beginning of 2000, you would have about $421 at the beginning of 2021, assuming you reinvested all dividends, which means your investment would have nearly doubled in approximately nine years.
With the power of big data and the boom of Artificial Intelligence and machine learning, the momentum of American technological advances will continue its bull run well into the future. Such consistent growth is yet to take form in other global markets. With corporate profits on the rise, America’s free-market economy has survived the pandemic, supply constraints, and labour shortages. The same cannot be said about other developed countries such as France, Italy and even Germany, whose economic performance has declined sharply, exposing the vulnerabilities in the growth model of these countries. The US, however, continues to reign supreme. In the year of coronavirus, the US stock market soared, with high-flying firms such as Apple, Microsoft, and Google parent Alphabet powering this year’s rally.
If you are considering investing your hard-earned money in a foreign economy, you want to make sure that your investment fares well regardless of the market atmosphere. As the fertile ground for investments, the US market is a channel to generate stable returns for your child’s future.
India now delivers the second largest population of students studying abroad, with more than 50 percent of Indian students studying in North America. The total number of Indians pursuing their higher education in the United States and the UK, Canada, and Australia has grown steadily over the years, apart from the brief hiatus amid the pandemic. As per the Ministry of External Affairs of India, in 2020 alone, 261,406 Indian students went abroad, contributing $7.6 billion to just the US economy. As of August 2021, both the US and the UK have, again, accepted record numbers of Indian students to universities.