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As globalization continues to reach every corner of the world, investing internationally has never been so easy. In fact, you can invest in overseas markets and even hold a foreign investment portfolio from the comfort of your own home. All it takes is a simple phone call.
Today, investors can reap the rewards of investing in international markets. This is something you might not have previously known about or had access to.
Simply put, a foreign portfolio investment is a type of investment that an investor registers overseas. Just as with domestic investment portfolios, international investment portfolios can include a range of assets. These might include stocks, bonds, and fixed-rate investments. However, you will just hold them overseas.
But before we explore the benefits of overseas investments, we need to understand how they work.
How Can You Invest Internationally?
Many investors naturally want to have some of their owned assets listed outside of their home country. On the other hand, many are unsure about how to go about it. Although the process of investing internationally may seem like an intimidating prospect, it is far easier than you might think.
One of the most common and reliable options available to investors is to invest through a UK-based fund. Such a fund offers investors a diversified investment option through one purchase. Therefore, the individual investor does not need to worry about choosing specific stocks to include in their international investment portfolio.
It is relatively easy to access the investment trust or fund that operates in the region of the world you want to invest in. For example, let’s say an investment trust is closed-ended. This will mean shares in the trust are listed on the stock exchange and are available to purchase. Therefore, the price is dependent on the performance of the stock.
In comparison, if you are looking to pursue your international investment option through an open-ended fund or unit trusts, you can purchase this through a fund manager or financial advisor.
What Are the Benefits of Investing Internationally?
Investing overseas provides investors with a range of benefits. But what are they?
Gain Access to More Significant Market Options
Domestic markets in the UK have become extremely competitive. They have become saturated with investors over the last twenty years or so as the accessibility to the financial markets has increased.
Foreign or international markets, on the other hand, can offer significantly less competition. In fact, they can sometimes be a marketplace with greater investment opportunities. Though this is ultimately dependent on what country or market you invest in, investing overseas provides investors with a dramatic increase for investment. Moreover, it provides opportunity and potential for significant returns.
Benefit from Investment Diversification
Arguably the most notable benefit is the opportunity for investors to diversify their investment portfolio. This in turn lowers the level of risk associated with an investment portfolio. Due to the nature of international investments and the global stock market, investors can have confidence that factors that are effective on the German Stock Exchange at any time will be different from those in Asia. For those who are unsure of what this means, it allows investors to experience lower levels of volatility over their portfolio.
Find Attractive Yields
International markets continue to develop significantly, especially those in East Asia. As they do, global investments in these regions provide shareholders with attractive yields. This is good news for income-seeking investors as well as for investors who are looking for capital growth.
Diversification is often cited as the most common benefit. However, investment trusts that openly pursue high-yield returns in international markets provide investors with the chance to take advantage of stocks that perform well across a number of countries. What’s more, they require only a relatively small amount of work on the investor’s behalf.
Enjoy Increased Liquidity
Foreign portfolio investments are often more liquid than their domestic counterparts. But what does this mean?
In short, this means that investors can buy and sell them quickly and with relative ease. Higher or increased liquidity provides investors with a useful set of benefits. More liquidity means greater buying power for investors looking to take advantage of investment opportunities as soon as they arise. This is because an international investor will have a ready and available money pot.
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Investing Internationally Can Be a Profitable Opportunity
International investments provide investors with a fantastic opportunity to expand their investment portfolio into a collection of assets that provide them with fantastic returns. As domestic markets continue to attract more people every year, international markets allow investors to pursue investment opportunities that few people are aware of.