Stepping out into the international market, and investing in foreign assets, can be daunting and challenging. From foreign regulations to the fluctuating values of different currencies, the process of making your first international investment has all kinds of complications and stumbling blocks. Still, tying some of your capital up in foreign assets can be extremely important for a healthy, diversified portfolio. Here are some tactics to consider for your first investment.
Consider Equity Crowdfunding in Promising Markets
At some point, the promise of an emerging market is sure to draw your eye as an investor. However, the term “emerging market” can mean almost anything, and is thrown around as a marketing ploy by a lot of investment platforms. The main thing you’ll want to keep an eye on is fast growth. Growth in emerging markets has been on a steady rise in recent years, but the price of riding this growth is higher volatility and risk. If you weren’t already aware, equity crowdfunding involves micro-investments from groups of investors, in exchange for equity as a certain percentage of shares for partial ownership. For some developing economies, a sum as small as 1,500 USD can make a huge difference. When you’re investing just a small part of this, you minimize your risk and maximize your potential for returns.
Research the Most Lucrative Government Initiatives
The world is bursting with government initiatives that are intended to attract investors, and give you some incentive for stimulating the country’s economy. For example, some nations offer an entrepreneur visa, which will allow you to stay in the country for an extended period of time, provided you have a certain amount available to invest, and meet a few other requirements. One thing that you should always look into is the kind of tax relief you can leverage by investing in a certain country. The UK’s Enterprise Investment Scheme, for example, compensates the risks of investing in small businesses with a range of generous tax reliefs. You’ll be able to enjoy tax relief from investment losses, tax-free growth, and significant discounts on capital gains and income tax. Government initiatives alone can tip the balance of success when you’re pursuing foreign investments, so make sure you take the time to research them.
Use ADRs to Buy Individual Stocks
By taking advantage of American Depository Receipts, you can acquire as many foreign stocks as you wish in the form of US-traded securities which represent some shared ownership in foreign businesses. This has some massive perks. The shares and their dividends are denominated in dollars, which will take a lot of the hassle and loss out of any necessary currency conversions. You won’t need to hire a new broker to use these, or even create a foreign brokerage account. Furthermore, American Depository Receipts trade during US market hours, and share settlement and clearing procedures with the stocks you’re used to trading. This means you’ll have a lot less homework to do to ensure you’re managing your stocks well. If you’re looking to diversify with foreign companies, these tools can be a godsend.
