It's the world's largest democracy, its technology sector is going gangbusters, and its stock market returned 34% annualized over the past five years. What could go wrong? As it turns out, plenty. So before you commit a nickel to investing in India, you'd best read In Spite of the Gods: The Strange Rise of Modern India (Doubleday, $26).
Smart investors know that stability, not profits, is the prerequisite for success in emerging markets. But you won't find a quick answer to the question of India's stability -- it's built neither on quicksand nor bedrock.
Unlike homogenous China, India is formidably complex -- an amalgam of Hindu, Muslim, Sikh and Christian populations layered in a fading caste system. Some 750 million of India's 1.1 billion people live in villages with inadequate health care and no schools, reports Edward Luce, the author and a Financial Times writer who spent five years in India.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The country's economic upswing began in 1991, when it ended a stifling system of controls and permits, the so-called License Raj. Since then, technology businesses, in particular, have taken off, although they still employ only one million people. In fact, only 35 million people in India have formal income to pay taxes on.
India has both powerful advantages and big disadvantages, says Luce. On the positive side: diversity, democracy, a young and hungry workforce, and a free media and judiciary. On the negative end: poor infrastructure, pollution, a growing AIDS epidemic, heavy-handed government regulation and corruption.
So India is a shifting mosaic, and Luce won't hazard a guess as to how the pieces will fall into place. But investing in India is worth the risk, long term, despite the volatility. The book's key takeaway for investors: "India's growth potential is even more striking if you consider how much has been achieved with so little."
-
Gen X? Challenges Lie Ahead as Retirement NearsTapping home equity and working longer are key strategies that can help overcome a savings shortfall.
-
How Grandparents Can Help with Education ExpensesBefore paying for your grandkids' education, it's important to consider how to help them without risking your own retirement. Here are 10 things to think about.
-
What Tariffs Mean for Your Sector ExposureNew, higher and changing tariffs will ripple through the economy and into share prices for many quarters to come.
-
How to Invest for a Fall Interest Rate Cut by the FedA lot can happen between now and then, but the probability the Fed cuts interest rates in September is back above 80%.
-
Are Buffett and Berkshire About to Bail on Kraft Heinz Stock?Warren Buffett and Berkshire Hathaway own a lot of Kraft Heinz stock, so what happens when they decide to sell KHC?
-
How the Stock Market Performed in the First 6 Months of Trump's Second TermSix months after President Donald Trump's inauguration, take a look at how the stock market has performed.
-
Fed Leaves Rates Unchanged: What the Experts Are SayingFederal Reserve As widely expected, the Federal Open Market Committee took a 'wait-and-see' approach toward borrowing costs.
-
Fed Sees Fewer Rate Cuts in 2025: What the Experts Are Saying
Federal Reserve The Federal Reserve cut interest rates as expected, but the future path of borrowing costs became more opaque.
-
Fed Cuts Rates Again: What the Experts Are Saying
Federal Reserve The central bank continued to ease, but a new administration in Washington clouds the outlook for future policy moves.
-
Fed Goes Big With First Rate Cut: What the Experts Are Saying
Federal Reserve A slowing labor market prompted the Fed to start with a jumbo-sized reduction to borrowing costs.
