The Pros and Cons of investing in foreign countries

Fear of losing your investment always looms over you when you are considering where to put your hard-earned money. You want to invest for…

The Pros and Cons of investing in foreign countries

Fear of losing your investment always looms over you when you are considering where to put your hard-earned money. You want to invest for your dream vacation, for your future, for your children. You want the freedom and security that comes with having a neat portfolio of assets that keep paying you great returns while also being risk-free. That is why you have understood that diversifying your assets is the best option available. Surely, a carefully chosen assortment of risk-adjusted assets is the best option there is to protect your wealth and increase your returns. However, what about geographical diversification: investing in other countries? Thanks, to the internet, today you can actually invest in other countries with just a tap on your smartphone.

So, what are the factors you should consider before you go for global investing? We have listed for you five pros and cons of buying international assets.

Pros:

1. Risk-mitigation

2. Higher rate of returns

3. Opportunity to invest in markets that are doing well

4. Access to new sectors

5. Increase in financial knowledge

Cons:

1. Exchange rate fluctuation

2. Information hustle

3. Finding a reliable fund manager

4. Cultural factors

Cons:

Exchange rate fluctuation:

A hugely significant factor that could be an utter menace in global investing is the exchange rate of your currency. Exchange rates fluctuate every day. This makes it extremely hard to calculate the returns on your investment or fix the value of your wealth. What if you made great returns on your investments but your currency fell and that ate into your gains? Worse, what if both your asset value and currency fell? Thankfully there is some hope. World over Central Banks are seeing inflation targeting as a beneficial measure and are taking initiatives to move in this direction. The indirect fruitful consequence of this philosophy is that exchange rates remain stable within tolerable ranges.

The dollar has been a strengthening currency for over 100 years. Investing in US companies is a great option for the developing world.

Here is some more encouragement. Investing in the US is a great option for people in the developing world. If you notice traditionally, the overall trend is an appreciation of the US dollar. This should make investing in US companies more promising for you.

Information hustle:

While staying up to date with world and economic stories is a challenge in itself, international diversification requires added effort on your part. When you are investing long-term you need not track the day-to-day events in the financial world. Nevertheless, you still need to do your homework to keep abreast of the world situation.

Invest in sectors you are passionate about and industries in the area of your expertise. You will enjoy keeping track of your investments.

But this need not be burdensome if you are investing in sectors that you are passionate about and industries about which you have a working knowledge. If you are doing this, you may well enjoy keeping track of your investments!

Finding a reliable investment manager:

Whether you are opting for foreign bonds or stocks or mutual funds or other assets, you need a knowledgeable reliable patient person to guide you through the investment process.

CrowdCandy is are reliable and trustworthy investment partner. Check out our platform for expert guidance and counsel.

Today there is an umpteen number of people claiming to be experts when in reality all they possess is information they picked up from here and there. While they may surely know more than the average person seeking to invest, they may not have an in-depth knowledge of the financial system.

Cultural factors:

A nation’s financial markets can be greatly influenced by its culture. The choice of investment option, risk tolerance, seasonality in asset purchase and liquidation and several other factors seem to vary among nations.

As a global investor, you may need to familiarise yourself with these factors. While initially, this may be a challenge, over time you should be able to get a good grasp of the matter.

Pros:

Risk-mitigation:

No financial investment is a hundred per cent risk-free. An economic downturn, a change in the political scene, a pandemic, a natural disaster or any odd thing can cause a huge sway in your asset value. That is why you diversify.

Make sure your investments are geographically diversified.

When you diversify you are creating for yourself a cushion that could absorb a loss if one set of your assets performs poorly. Now, imagine you can protect yourself even further by spreading your wealth across international borders. This is clearly a win.

Higher rate of returns:

When a certain country’s economy is growing and you have put your money in it, your wealth grows along with it. Think about this. What if you had not invested in that country? Would it not be a missed opportunity?

Investing in countries with a highly developed financial system makes your investments safer and promises higher returns.

Investing in other countries, especially in those with a good and transparent financial system is a smart move. Today with the ease of access to overseas financial markets, you should definitely explore this category of assets.

Opportunity to invest in markets that are doing well:

When you are investing abroad and you have liquid assets (those that you can sell off very quickly), you can easily encash them and buy assets in countries that are currently doing well. You are not a slave to the economic fluctuations of your own country. This works great especially when you are doing daily trading.

Get liquid assets in other countries. Jump into sectors that are showing great growth.

You can capitalise on the daily and weekly (short-term) trends in the market and earn highly profitable returns. And even for long-term investments, the ability to quickly transfer your wealth overseas is a truly wonderful option that investors in the past longed for.

Access to new sectors:

When you are investing in other countries, you have the privilege of buying stocks from new and upcoming sectors that are likely to do well in the future but are unavailable in your own country.

Invest abroad and get access to sectors you do not have in your own country.

For example, artificial intelligence is a field that seems to offer much promise in the coming decades. And you may want to invest in companies that are pioneering the field. However, you do not have a single one of them where you live. What would you do? This is where being a global financial citizen is a near necessity.

Increase in financial knowledge:

When you are investing in other countries you are naturally impelled to educate yourself about the economy, politics and a host of other factors about the other nations that may have an impact on your wealth. Hence, you unwittingly accrue an immense amount of knowledge. Now, this may sound irrelevant to you.

However, when it comes to investing knowledge is indeed power. The more informed you are about the world scenario and what might happen in the near to distant future the wiser financial decisions will you be able to make.

As you can see the advantages of being a global investor far outweigh the disadvantages of being one. This is why we at CrowdCandy have decided to offer you a secure and trustworthy platform to diversify geographically and also invest in digital assets — NFTs. NFTs are a novel asset class that is picking up popularity and are likely to be all the rage in the next few years.

So hurry! Get on our platform and start investing.