With so many markets around the world offering tantalizing options for investment, there’s plenty of choice for those who want to build an internationally focused investment portfolio. China alone has a gross domestic product (GDP) that grows at a rate of 6.5% or so per year – and with many other countries also enjoying big markets, you’re sure to find somewhere that suits. However, there are worries involved. Investing abroad can lead to amazing returns, but it can also leave you with challenges to overcome – and everything from currency to time zones can pose problems. This article will look at some of these worries, and how you can take steps to resolve them.
Time zones
The main practical concern when investing abroad, of course, is the impact of different time zones.
Buying shares in China, for example, might require you to occasionally be free to work at, say, 9am Beijing time – which is 9pm in New York City! Usually, the main way around this is to simply avoid day trading, which is the practice of buying and selling instruments within a 24-hour period. Investing for the long term not only prevents you from falling victim to time zone problems, but it also generally means more sustainable profits.
Regulatory environments
A more strategic concern that you’ll need to take into account is regulation, as this can differ from economy to economy. Australian local government often imposes very strict and detailed regulation on businesses, for example, while regulators in the EU are known for being particularly harsh when it comes to antitrust. Doing your research is essential to avoid contravening any laws or local business customs.
Currency conversions
If you make profits when investing abroad, then there’s a fairly clear path from the point of earning them to the point of receiving them. Tax liabilities and dividend payments may get in the way, but in general you know where you stand. With international investing, currency conversions add an additional barrier – and they can turn what was a handsome profit into a much smaller one.
Working with a reliable currency dealer who can provide you with the best rates is one way to reduce this financial burden. Another is to set up your investments in such a way that you don’t have to take all of the profits all at once: this way, you can extract them and convert them when the dollar is performing well. Be sure to check that the cost of a bank account in your chosen country, however, doesn’t outweigh the cost of converting the money into your own currency.
When it comes to investing abroad, an investor will probably have at least some worries about how it will pan out. Currency conversions can pose a headache, for example, while wading through regulation can be a time drag. However, by taking on board the advice in this guide, it’s possible to do well out of your international investment no matter where you choose to go.
