Overseas Investing- Different ways to go about it
Overseas investing can be an immensely rewarding and profitable venture if done right. There are a variety of assets into which an investor can invest into at reasonable prices. However, the investments have to done after thorough research and investigations. Any overseas investment would invariably involve currency conversions. It makes sense to look for suitable parties who offer favorable currency rates. Usually, there are third parties that offer a good rate compared to the market rates at the banks. It is hence advisable to enter into a contract with a reputed ethical currency conversion company in the home country.
Overseas investment can be done in multiple asset classes such as real estate, stocks, bonds, yachts etc. It is also advisable to get the help of a professional investment advisor before investing significant amounts of money into overseas assets. It is also a good idea to get in touch with tax consultants. If significant investment amounts are involved, well-known audit/taxation companies would be eager to help. There have been cases when overseas investments have gone terribly wrong due to improper understanding of tax laws in the overseas countries.
Overseas investments into foreign stocks and bonds would require some fundamental research on the macroeconomic data of the country. Key metrics such as GDP growth rate.
Unemployment numbers and trends, Inflation outlook, Currency outlook etc are some of the most important pre-requisite checks to be done before investing in any of the financial assets overseas. It is also helpful to have a good knowledge of the work equity and bond markets before investing in overseas stocks/bonds. There have been many prominent investors in the past that have succeeded in making an overseas investment of stocks. Investing in overseas stocks brings in a good amount of diversification and avoids the home country bias which most investors face. While trying to buy stocks abroad it is very important to understand the time horizon and the currency outlook. There are several cases when the stocks go up but the currency depreciates much more than the growth in stocks resulting in some serious damage to a person’s portfolio.
Overseas investment into physical assets such as real estate/property/yachts involved committing significant amounts of money.
Usually these types of investments require a few years to show positive results. Only investors with good risk appetite and patience are advised to earmark significant amounts of money into such assets. It is a good idea to do a thorough research of the related sectors such as tourism, land price trends and other demographic metrics of the country.
Overall, investing in overseas assets/stocks is not a very simple venture. This requires significant amounts of time and immense patience. Knowledge of the world currency markets and basics of economics can help a great deal. Any profits earned overseas are usually taxed in the home country. Hence, it is very important to have a deep understanding of the tax situation in the foreign company. Also, the repatriation of profits may not be straight forward in many countries. There are several countries in the world where overseas investing can be profitable. It is also a good idea to have a thorough understanding of a country’s risk profile before deciding to invest in a particular country.