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.
Instead of relying on just a single country’s growth, you’ll spread your economic and political risk across the world. The same is true for currency risk when you buy stocks denominated in a different currencies than your own.
Investing in a single stock would be risky, but investing in a single country is risky too. 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 have flexibility. The ability to trade globally instead of just in your own market is a huge advantage.
Tens of thousands of publicly traded companies are out there in the world. Some of these stocks are fantastic buys. Yet they’re unavailable to anyone who doesn’t have a brokerage account in the country they’re 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 Hong Kong. By having a Hong Kong brokerage account already in place, you could immediately react and buy assets which 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 investors being unfamiliar with markets besides their own.
Sometimes 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 places to invest in. They multiply many of the advantages which come from international investing.
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