Global Investments

The strategy of choosing globally-based investment instruments as part of an investment portfolio. International investing includes such investment vehicles as mutual funds, depository receipts, exchange-traded funds (ETFs) or direct investments in foreign markets. People often invest internationally for diversification, to spread the investment risk between foreign companies and markets; and for growth, to take advantage of emerging markets.

A global investment is the method of spreading out your investment capital between a mix of financial instruments and organizations. Investors have used this strategy for many years as a good method for managing the risks associated with investing. There are four benefits to global investing: diversification, currency valuation, decreased risk, and taxation.

The economy is cyclical in nature, with times of expansion and contraction. These cycles can be global, industry-specific or limited to a definite country or geographic location. By investing globally, the risk of being impacted by a downturn in the market is decreased. Even in the event of a global recession, there are still good opportunities for growth in companies that provide products and services required to meet a genuine need.

The value of currency exchange is a critical factor in making a global investment. If your money has a higher value, you can purchase more shares in a global company with the same amount of risk capital. This allows you to receive a greater return on investment in both dividend payouts and when you sell your shares. However, this does increase the risk. By combining currency fluctuations with stock investments, two independent factors have impact on your investments.

When looking at a global investment, it is possible to select a company offering a product that is new to the regional market, but has already been successfully launched in other countries. Taxation on investment income is a complex issue that has a huge impact on the profitability of investing. Global investments may fall into a tax loophole that reduces the rate of taxation on income from these investments.

A global investment provides the opportunity to increase your capital, manage your risk, and allow firms to increase their productivity and employment opportunities. When selecting this type of investment, it is important to invest the time to learn about the company, local industry, political situation, and threats. Review financial statements with great care and pay attention to changing dynamics, as they can have a huge impact on your investment.

International investments can be included in an investment portfolio to provide diversification and growth opportunities. All types of investments involve risk, and international investing may present special risks, including:

• Fluctuations in currency exchange rates
• Changes in market value
• Significant political, economic and social events
• Low liquidity
• Less access to important information
• Foreign legal remedies
• Varying market operations and procedures