If you owned the world’s stock markets in proportion to their size, about 97% of your equity would sit outside India. Almost no Indian investor holds anything close to that, and almost none should. The right answer sits somewhere between 0% and 97%, and it depends far more on your life than on the markets.
Why not just follow the world?
There are good reasons to hold more of your wealth at home than the global weights suggest. You spend in rupees. Indian equities have delivered strong long-run returns. Investing abroad adds costs, paperwork, TCS cash-flow and tax complexity. Every major market in the world has some home bias, and some of it is rational.
The problem is not holding mostly Indian assets. It is holding only Indian assets by default, without ever deciding to.
Three questions that set the answer
1. How much of your future is priced in dollars?
Start with spending, not markets. Children who may study abroad, property you may buy overseas, travel, medical care, or family you support outside India. These are dollar liabilities. Holding dollar assets against them removes a currency risk rather than adding one. For many families, this alone justifies a meaningful global allocation.
2. How concentrated is everything else?
Look at your whole balance sheet, not just your portfolio. A business owner in India, a home in Mumbai, a salary from an Indian company and an Indian equity portfolio are all tied to the same economy and the same currency. The more concentrated the rest of your life is, the more a global allocation diversifies it.
The reverse also holds. If you already hold stock options in a US employer, you may already have more dollar exposure than you think.
3. How long, and how much can you stomach?
Global equities are equities. They fall, sometimes sharply, and currency adds a second source of movement. Money you need within three years doesn’t belong in any equity, global or Indian. Money for goals ten or more years away can carry more global exposure, because there is time to ride out bad years.
Turning it into a number
We work it out in layers. First, the dollar-goal layer: an amount matched to the size and timing of known dollar spending. Second, the diversification layer: a share of long-term equity held abroad to reduce dependence on one market. Third, the constraints: TCS cash-flow, the $250,000 LRS limit per person, estate tax exposure and liquidity needs.
| Illustrative situation | What drives the global share |
|---|---|
| Child likely to study in the US in 8 years | Dollar-goal layer sized to the expected fees, built up over time |
| Business owner, most wealth in India | Diversification layer, phased in over several years |
| Employee with large US-employer stock | Little new US exposure; diversify across other regions instead |
| Retiree living in India, no dollar spending | Smaller, steadier allocation, with liquidity kept in India |
These are examples of reasoning, not recommendations. Two families with the same income can reach very different answers.
Then keep it there
Once the share is set, markets will move it. A strong year for the US can push your global share well above plan; a bad one can shrink it. Rebalancing once a year back to the target is what turns a global allocation from a one-time bet into a discipline.