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 makes more sense. 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. You increase your diversification and lower several different types of risk when investing globally. Any political and economic risk in your own country will instead be spread across the world. The same is true for currency risk when you buy stocks in a different currency than your own.
Investing in a single stock would be risky, but investing in a single country is also risky. You also diversify your holdings and increase the chances of long-term growth through buying international stocks.
Global Markets, More Flexibility
Investors truly thrive when they’re given flexibility. Being able to trade globally 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 don’t have a brokerage account in the country they are traded in.
Being able to react to global 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 could immediately react and buy 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 most investors have about markets besides their own. Much of the time, stock information is in a different language. The process of 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. They multiply many of the advantages which come from international investing.
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