Overseas investing offers some growth opportunities that may not be available in the US. However, investing in foreign markets can be tricky. If you’re not fully informed, you may be taking far more investment risk than you planned.
Trends in international business
Investors in overseas markets need to be aware of trends that may impact foreign companies. The Wall Street Journal devotes a section of the daily paper to World news, and how that news affects business. Here are some current overseas issues that may impact investing:
- Terrorist attacks: Both Europe and the Middle East have recently experienced terrorist attacks. These events make the process of doing business more difficult. Maintaining operations in a country with a higher risk of terrorism increases the cost of security. In addition to protecting people, firms also must secure buildings, inventory and equipment against possible damage due to a terrorist act.
- Greek debt issue: Greece is in negotiations with many European countries that have provided loans to their country. The negotiations address how Greece can reduce spending, in exchange for a bailout loan that would allow the country to operate and provide government services. The results of this negotiation may affect the currency value of the Euro. The Euro is the currency for many large countries in the region. Currency values have an impact on business.
- Immigration: Many countries in Europe and the Middle East are struggling with immigration issues. Immigrants are leaving unstable countries and regions that are at war. They are attempting to relocate to neighboring countries that are more economically developed. This creates problems in government spending and employment- both of which impact business.
Finding an expert in money management
Money For Lunch explains that trust is a key consideration for an investor looking for a money manager. Smart investment advisors may survey their customers about trust issues. They use the survey results to measure their progress and improve client relationships.
You can find financial experts around the world. The Twitter page of Al Masah Capital explains that the firm is an investment manager with expertise in the Middle East. The Mena Fund management site points out that Al Masah Capital manages a dividend fund. The fund investment objective targets common stocks that provide a dividend payout of 6% to 8% annually.
Overseas research tools
There are a number of great online tools that investors can use to learn about overseas markets:
- Bloomberg markets: Bloomberg offers extensive research on overseas markets. One useful tool is their listing of international Stock Indexes. An index is a group of stocks that all trade in a certain country or region. As each of the individual stock prices move, the index also changes in value. Investors use the index to judge the economic health of a particular country.
- Research analysts: Nearly every financial services firm has analysts that follow overseas stocks. These professionals read financial statements, talk to company management and visit client locations- including their retail locations. Reading an analyst’s report can provide a great deal of information about an overseas firm.
- Mutual funds: You’ll find thousands of mutual funds to choose from, including funds that invest overseas. An investor can find a mutual fund that invests in a particular area of the world. Because mutual funds invest in dozens of companies, your investment risk is diversified.
Overseas investing allows an investor to build a portfolio of both US and foreign stocks. Some overseas stocks have the potential for rapid growth. Before investing overseas, do your homework. Find a company that is an expert in investing outside of the US.
