Investing in foreign markets opens up a whole new world of opportunity. It gives you access to booming economies and areas that are full of potential yet where investment capital is at a premium. It also enables you to spread out your money, making your portfolio more resistant to economic shocks. Yet it also entails risks. Identifying good foreign investments can be challenging, with plenty of people out to swindle you. There are new rules and regulations for you to get to grips with and you’ll have to learn to cope with a fluctuating exchange rate. Where should you begin?
Foreign investing: the basics:
The simplest way to trade in foreign markets is to use American depositary receipts (ADRs), which are generally only available to companies that are subject to the same scrutiny as US businesses. US-traded international stocks provide a similar degree of reassurance. If you choose to explore further, try to ensure that you or somebody you have known and trusted for a long time is able to visit the premises of the companies you choose to ensure that they’re the real deal. Stay away from countries where there is political or military trouble or where the currency is highly unstable. Consider using forex to hedge against currency shifts and to protect the value of your investments.
Investing in China:
One of the most tempting markets for US investors in China, but in light of recent scandals involving companies being passed off as something they were not, it’s especially important to be cautious. The good news is that the Chinese government recognizes this issue and is supportive of investors who want to visit and assess businesses for themselves. Unfortunately, its recent clash with the US over tariffs is making some deals less attractive, and problems with internal regulation mean there’s a danger that the value of the renminbi may not be as high as claimed. Long-term investments are the safest option there.
Investing in Australia:
One of the strongest economies around at present in real terms, Australia has good regulation and largely manages to stay out of international political and economic scuffles, which makes it attractive to investors despite the fact that the potential for growth is lower than in many of the Asian markets. Finding futures brokers in Australia presents a good opportunity to benefit from the way its internal markets are developing. Learn CFDs profiles the most attractive ones and helps new investors to avoid scammers.
Investing in India:
With an economy that grew by 36% in 2017, India is a naturally appealing prospect for many investors. Here the problem is really one of scale. With so many start-ups emerging, how do you know which ones are worth pursuing? Here, microfinance is coming to the rescue, helping promising young companies reach the next level. Looking out for businesses that have been financed like this can help you to identify solid prospects with enough of a support base to be able to make use of your money and keep growing.
Making the effort to understand and engage with foreign markets is well worth it. Although there are risks, there are also opportunities you wouldn’t want to miss.
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