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Investing Abroad: Benefits And Risks Of International Investing

Warren Buffett Wannabe — Fri, 23 Apr 2010 07:05:00 +0000

Investing Abroad: Benefits And Risks Of International Investing

Investing Abroad

In an economic environment where things are constantly shifting, investors want to find ways to diversify their portfolios and take make money from companies that are performing well in other countries. There’s no rule that says you have to be limited to the investment opportunities in your country. Buying shares of international companies based in the U.S. is one way to go to diversify your portfolio, but it’s also becoming increasingly easy to invest in equities and debt available on overseas markets. This is a great opportunity to take part in booming opportunities in fast growing stock markets around the world. Investing globally puts you in a position where you can benefit from strong performances in multiple markets, not to mention that some markets might perform well when others perform poorly, helping to stabilize your investment portfolio against widespread losses.

Benefits of Investing Abroad

When considering the option of investing abroad, investors like to invoke what I like to call the “rosy scenario”, which is what can happen if all the right conditions are met. In this case you can make money three ways:

the investment itself (provided that it is a sound and profitable venture) becomes highly desirable and thus rises in price, providing capital gains
the investment pays dividends
the country’s currency rises agains the dollar, so that should the investor decide to sell, they get more dollars from the transaction

Another perspective on international investing involves the correlation they have with your local market. Although we’re living in a world that’s increasingly interconnected, all markets do not necessarily move in sync with each other. While one market can be down, another can be up, the correlation depending on what extent those two markets’ economies interact with each other. So if you’re expanding your investments internationally in markets that have little correlation with your own local market, overall you’ll reduce your portfolio’s overall volatility.

You should also consider the fact that not all investment opportunities may be available in your own country’s stock market. For instance, if you’re an American investing exclusively in the US market, you might miss out on the rapidly developing makers of steel and electronic appliances which are not based in the US. Analysts also say that emerging stock markets in China, southern Europe, and southeast Asia have a faster growth rate than the established markets in the US and United Kingdom.

Risks of Investing Abroad

There’s no such thing as risk-free investing, and overseas companies face many of the same realities as do the ones in the U.S. But when deciding to invest abroad, you have to keep a certain number of things in mind.

Probably the biggest risk in investing abroad comes from the potential for political and economic upheavals that less stable foreign countries may experience, which can greatly affect the local stock market. In all honesty there’s not much that can be done agains that, except maybe to stay out of the most volatile countries. Then comes the fact that differences in market regulations and standards could also be a difficulty especially when it comes to evaluating foreign companies: tax treatment of gains or losses differ from one country to the next, accounting and trading rules may differ, market regulation can be loose, information can be hard to find, and so on. Finally, you should not overlook the fact that converting dividends into dollars may add extra cost to the transaction.

How to Invest Abroad

There are several ways for a US investor to invest internationally

Big US brokerage firms with branch offices abroad that can invest directly
Some international and multinational companies list stocks directly on US stock exchanges
Many mutual fund firms offer international funds that invest overseas
The stock of some of the largest companies is sold as American Depositary Shares (ADSs)

Investing abroad is not without its risks, but so is any other investment vehicle out there. As long as you do your homework and invest in solid foreign companies operating in relatively stable environments, there’s a great potential to both increase your investment portfolio’s value and reduce your risk exposure.

Investing Abroad: Benefits And Risks Of International Investing

How To Invest – Edition Four

Warren Buffett Wannabe — Tue, 09 Feb 2010 04:47:56 +0000

Welcome to the February 9, 2010 edition of how to invest.

Mutual Funds

Frank Goley presents BUSINESS SUCCESS STRATEGIES » Blog Archive » Why a Business Plan is so Important to your Business Success posted at Business Success Strategies, saying, “The business success strategies blog is written by small business success expert, Frank Goley, the chief business consultant for ABC Business Consulting. Frank has more than twenty years experience helping companies start, grow, turn around and succeed.”

Alan Johnson presents Market Timing Manipulation posted at The Reasoned Investor.

Other

Brian McKay presents New Credit Card Rules – How the New Credit Card Laws Affect You posted at MonitorBankRates.com, saying, “A new set of credit card rules takes effect February 22, 2010 and you should be aware of the new rules. The new credit card laws are positive for consumers and offer consumers a new set of protections.”

Real Estate

Braudis Lee Pegram presents How To Purchase Commercial Real Estate-Revisited posted at The koH Resources Blog.

Christine Brady presents Investing in Real Estate posted at Real Estate Investing, saying, “This article offers valuable tips for individuals wanting to buy investment property.”

Stocks

Patty Pedersen presents Good Stocks to Buy When Stock Market Correction is Over posted at AlphaProfit MoneyMatters – Investing Blog, saying, “Good stocks bought at the end of a stock market correction can deliver outsized returns. Here are 3 good stocks to buy across 3 different sectors.”

stockman presents Chart Base Patterns posted at Learning Stocks, saying, “A key to being a succesful stock trader is learning how to spot chart base patterns and when to buy a stock. A chart base often acts as a foundation for stocks to “jump” off of; to begin a large share price increase.”

Sun presents It Could Be Time To Jump On The Buffett Bandwagon posted at The Sun’s Financial Diary.

Joanne presents Stock Dividends And Their Benefits posted at Beating The Stock Market.

That concludes this edition. Submit your blog article to the next edition of how to invest using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

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How To Invest – Edition Three

Warren Buffett Wannabe — Tue, 02 Feb 2010 16:19:26 +0000

Welcome to the February 2, 2010 edition of how to invest.

Commodities

blog.brooklynposh.com presents Saving & Spending posted at the brooklyn posh blog, saying, “Beginners guide to safe investments”

Other

Keith Morris presents A Debate About Retirement-Related Topics posted at LifeTuner, saying, “This blog entry highlights one of our recent podcast episodes featuring two young adults discussing retirement-related reforms, such as auto-IRA.”

Kristie Lewis presents 100 Extreme Ways to Save Serious Money posted at Accounting Degree.com.

James The Traveler presents Free Money From Government posted at Free Government Grant Money, saying, “Government Grant Money Can Provide Seed Capital.”

HighestCDrates presents What is a Certificate of Deposit? posted at Highest CD Rates Info, saying, “A certificate of deposit can be a stable addition to any portfolio.”

MoneyNing presents Avoid These Five Investment Mistakes posted at Money Ning, saying, “Don’t make the same mistakes I did and avoid the pitfalls with these simple but important points.”

Abdulrasool Sumar presents How to Retire as a Millionaire with your 401k Plan and 7 Strategies to Achieve Growth of your 401k Plan posted at 401k, saying, “Learn the story of Knute Iwaszko who saved $1 million in his 401k plan with a $60,000 annual salary and paying the costs to raise 5 kids. You do not have to be a Goldman sachs CEO or a whiz kid on Wall Street making millions!”

Precious Metals

Rita presents Investing In Precious Metals posted at Bad Lizard’s Reptilian Wisdom, saying, “Reasons to incest in precious metals, precious metal facts and real life example.”

Real Estate

BWL presents Should We Pay Off Our Home Early? posted at Christian Personal Finance, saying, “A look at whether it is a good idea to pay your house off early…”

Peak Personal Finance presents Tax Advantages of Having a Mortgage posted at Peak Personal Finance, saying, “A quick summary of the tax benefits of having a mortgage.”

Stocks

20smoney presents Is The Stock Market Bottom Still To Come? posted at 20s Money, saying, “A look at investor psychology and why we might not yet have hit bottom in the stock market.”

Sun presents ComputerShare Review: Complete Process To Buy Stocks Directly [Broker Reviews] posted at The Sun’s Financial Diary.

Rob presents Roth IRA Rates posted at Stock Tips.

SFF presents How To Start Investing posted at Simple Financial Freedom, saying, “Tips to help you transition into active investing.”

BeaBu presents Are You a Bear or a Bull? Or a BeaBu? | BeaBu posted at BeaBu.com, saying, “Investors, short sellers, and the others – why you should trade on both sides. BeaBu.com is a blog about risk taking, macro trading, and alternative investments.”

Sun presents Why Direct Stock Purchase Plan Still Makes Sense posted at The Sun’s Financial Diary.

Chase Stowers presents Dollar Cost Averaging posted at Chase Stowers Dot Com, saying, “Want to know how to improve your odds in the market? Try Dollar Cost Averaging!”

That concludes this edition. Submit your blog article to the next edition of how to invest using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

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How To Invest – Edition Two

Warren Buffett Wannabe — Wed, 20 Jan 2010 05:18:40 +0000

Welcome to the January 19, 2010 edition of how to invest.

Real Estate

Gavin R. Putland presents Problem: the ‘rational’ price of land is infinite; solution: abolish income tax posted at LVRG Blog, saying, “There is reason to believe that real estate prices are governed by the limitations of the financial market, not the fundamentals of the property market.”

Mandana Binesh presents That Is the Question: Buying a Home or Renting a Home posted at BuyHomeToronto.ca, saying, “Is buying a property, usually a house, a good investment or you save more money if you rent? This is what I have discussed about.”

Stocks

Super Saver presents How I’m Investing in China posted at My Wealth Builder.

Nesher presents Market Analysis System (MAS) posted at Internet Stock Trading for Beginners.

Aussie Investor presents Best Shares To Buy In 2010 posted at Australian Investing, saying, “Buying shares over the past couple of years has certainly been a hair-raising experience for most of us. It’s been an extraordinary roller coaster ride. So how do we restore our investment portfolios back to their former glory? In this post, the author offers some tips to help you find the best shares to buy for 2010.”

KevinFCC presents Is Buy & Hold Investing Still Relevant? posted at Simple Financial Freedom, saying, “A look at buy and hold investing, why it became so popular, and some potential alternative strategies.”

Other

Ben Dinsmore presents 2010 Retirement Plan Contribution Limits posted at Trees Full of Money, saying, “This handy chart shows the maximum contribution limits for various retirement accounts in 2010.”

Abdulrasool Sumar presents What is a 401k Plan? History of 401k Plans & Annual Developments Timeline from 1978 – 2003 posted at 401k, saying, “As at 2003, total estimated number of 401k plans was 438,000 in America with assets totalling $1.9 trillion & 42.4 million active participants.”

Sun presents Schwab Reduces Online Stock Trade Commission to $8.95 posted at The Sun’s Financial Diary.

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How To Invest – Edition One

Warren Buffett Wannabe — Tue, 12 Jan 2010 05:45:26 +0000

Welcome to the January 12, 2010 edition of how to invest.

Bonds

Arthur Pledger presents Welcome to Wall Street – Part 4 posted at World Domination with Arthur Pledger.

Mutual Funds

Lovelymary presents 100 Inspiring Personal Finance Posts for the New Year posted at Accounting Degree.com.

CPF presents Should you convert your IRA to a Roth? posted at Christian Personal Finance, saying, “A look at some of the benefits of converting your IRA to a Roth IRA in 2010…”

Precious Metals

Sam presents Investing in Gold posted at Surfer Sam and Friends, saying, “Thanks for including my article. Here’s an excerpt… Gold is a precious metal found underground around the world. Gold is considered by many as a store of value and a safe haven for wealth in economic crisis. One of gold’s important properties is psychological, because it is so closely associated with money. This gives it an immeasurable advantage over other tangible stores of wealth. Most people readily associate gold’s distinctive color with wealth, and consider the color of gold beautiful. King Midas of mythology, who could turn everything he touched into gold, had the first fatal case of “gold fever,” the frantic need to seek and hoard gold.”

Real Estate

Steven R. Bennett presents Real Estate Investing – Buyer’s Perspective | Powers McCulloch & Bennett, LLP posted at Living Trusts – Post Mortem Administration, saying, “The Oregon based law firm of Powers, McCulloch & Bennett, LLP, comprises attorneys to assist clients in real estate investments.”

Stocks

Jeff Williamson presents Beginners Guide To Investing Online posted at Investing Online for Beginners.

stockman presents How to Read Stock Charts posted at Learning Stocks, saying, “This post is intended for anyone that is just getting into and learning about investing. The chart is a very basic foundation of stock research, and if you are brand new to investing or then this post is a good place to start your learning.”

Aussie Investor presents 2010 Share Market Floats – What Can Investors Look Forward To? posted at Australian Investing, saying, “Like 2008, 2009 was not a great year for Initial Public Offerings in Australia. The market for new issues had practically closed down in the first half of the year and even in the second half, there were only a handful of new share floats of any size. So what will 2010 have to offer for stock market investors? This post discusses some of the likely share market floats which investors can look forward to in 2010.”

David presents How to Choose a Stock Broker posted at Money Under 30, saying, “For new investors, this is a simple introduction to selecting a basic online broker along with guidance for when going with a full-service broker might make sense.”

Other

BankShout presents How To: Understand SEP IRAs posted at BankShout.

Evolution Of Wealth presents Cash Is Clementines!?! posted at Evolution of Wealth, saying, “For the average person that has a problem with debt cash makes sense. For the rest of use, cash will only slow us down. Cash is not king. Focus instead on the power of LUC (liquidity, use and control).”

Editorial presents What makes them rich can make you too. Discover it now. posted at Your Best Library, saying, “What is it that makes people poor, middle-class or rich? How can you learn it to apply in your own life too?”

David de Souza presents Make Checking Your Tax Code Your New Year’s Resolution posted at UK Tax Blog, saying, “A profitable New Year resolution should be to check your tax code and get it corrected before the end of the tax year.”

Vahid Chaychi presents How Forex Market Reacts to Bollinger Middle Band posted at Forex Signals | Forex Market Analysis | Online Currency Trading Education, saying, “This article explains how the forex market reacts to an indicator named Bollinger Middle Band and how a trader can use this to trade and make money.”

Kaitlyn cole presents Econ 102: Money Tips for the Rest of Us (Infographics) posted at Online Colleges.org.

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