You may have traded stocks in your own country before. However, deciding to invest in Asian stocks and benefit from the growth of emerging markets might make more sense. From diversifying your portfolio, to becoming more flexible and discovering hugely profitable buys that cannot be found domestically, those in the 21st century will need to start looking throughout the global economy to give themselves the biggest chance for success.
International Investing Gives Greater Diversification
One of the main reasons to start international investing is for diversification. Investors must not only make money, but protect it too. By buying stocks in foreign countries, you increase your diversification and lower several different types of risk. Any local political and economic risk that your own country possesses will instead be spread out throughout the world. The same is true for currency risk when you buy stocks in a different currency than your own.
Just as investing in a single stock would be risky, investing in a single country is also risky. By buying stocks globally, you also diversify your holdings and increase the chances of long-term growth.
Global Markets, More Flexibility
Investors truly thrive when they are given flexibility, and being able to trade internationally instead of being restricted to your own market gives you a huge advantage. There are tens of thousands of publicly traded companies in the world. Some of these company’s stocks are fantastic buys, but are unavailable to those who do not have a brokerage account set up in the country they are traded in.
Being able to react to international news also gives flexibility. Local events can be hugely profitable for investors, but only if they have access to the local exchange. In a hypothetical scenario, let’s imagine that a large oil field was found off the coast of the Philippines. By having a Philippines brokerage account already in place, you would be able to immediately react by buying assets that would benefit most
Drawbacks From Investing in Asian Markets Are Few
Of course, there are difficulties with investing in Asia. Most of them are related to the unfamiliarity that most investors have about markets besides their own. Much of the time, stock information is in a different language, and the process for setting up foreign brokerage and bank accounts can deter investors entirely. But while there is a steep learning curve to global investing, the positives far outweigh the negatives if you are willing to put in the time and effort.
Frontier markets are some of our favorite countries to invest in, multiplying many of the advantages which come from international investing.
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