Many people in the UK have made the smart choice to invest some of their savings. This helps to not only get a better annual return than you would in a bank savings account but also enables you to open up another stream of income. After a while though, some investors will feel confident enough to branch out and begin investing in overseas businesses and markets.
This is a good idea because it prevents your entire portfolio from being wiped out if the domestic financial markets collapse. Getting into international investment can also help you find new opportunities to make money and identify markets which are just starting to climb. But what do you need to know before investing any money overseas?
Find the right places to invest
This may sound overly simplistic but the first thing you should do is take time to research which sectors or businesses in which countries you plan to invest in. The key is to look for industries or companies abroad that are set to really blossom or have room to continue a winning run. Doing so will help you to invest in the right areas to get the best return on your money.
A Chinese CRO is a great illustration of this idea in action. Chinese companies which run trials on behalf of Western drug companies are really making their mark and vying for a piece of the global CRO market. Indeed, it has been said that the Chinese CRO market alone could be worth $100bn by the end of 2020! By finding industries like this to invest in abroad, you could achieve some very good returns over time.
Think about investing through ETFs
If you do not fancy investing internationally through the purchase of individual stocks in foreign companies, then an exchange traded fund (ETF) may be a good idea. These funds bring a more diversified approach to foreign investment and there are many around now which focus on these kinds of stocks. As well as helping to spread your investment risk through diversification, these foreign ETFs are also easy to find and trade with major brokers. Just remember that fees for international ETFs could be higher than you are used to when investing in stocks domestically.
Rebalance your portfolio now and then
For investors in the UK who expand to investing abroad, it is common to simply contribute a set amount every month into their various assets. Doing this over a long period of time without rebalancing every now and then is not advised. Over a set period, international stocks could outperform domestic stocks for example and affect how your portfolio is made up. It is much better to review and adjust your portfolio once you have invested internationally to keep risk levels acceptable.
International investment is not scary
Many UK investors find the prospect of putting money into overseas companies or sectors scary. You really should not think like this as it is not true. As long as you perform careful research before making any investment abroad, you should have no trouble. For those who are looking to get going in this area, the above tips should help.