How to Explore Investment Options Abroad

Investing within the country is much simpler and easier to handle than investing abroad. The only time you may want to consider investing abroad is when the return on investment is significantly higher than at home. If you intend to make an investment abroad for the first time, then consider your age and your potential to assume risks. Two very significant venues for making investments are the stocks (and bonds) issued by companies abroad and in realty. Making investment in realty can be a little different in the sense you need to have a closer knowledge about the properties. Often such investments are difficult to liquidate should you want to convert them back to cash.

The first step in exploring an investment is to check the political stability of the country where you propose making the investment. The second step is to learn as much as you can about the economy of the country and the inflation rate there. Too high an inflation rate often signifies poor performance of industries in general. If you propose to make investment through mutual funds, see where your funds are being invested. Another important aspect you need to consider is how fast you will be able to liquidate your assets. It is not uncommon for some countries to place restriction on what foreigners can buy. Some countries even place significant restrictions on repatriating dividends.

Rather than buy directly through the stock exchange, it is sometimes cheaper to apply for new issues. Hundreds of companies outside the US raise money by way of fresh capital issue either at a premium or at face value. Since it is not always practical to keep a tab on their performance, it is always advisable to take the services of a stock broker to apply on your behalf. They can advise you on forthcoming issues, country wise or even sector wise. Brokers will bill you for the services they render and it is usually worth the amount, considering the efforts that they make to see your investment going through.

Another significant venue for making foreign investments is the ADR (American Depositary Receipts). ADRs have significant advantages and are relatively safe to buy, and easy to sell should you want to liquidate. For those who don’t understand what an ADR is, understand those as representing one or more shares of a foreign company (or part) with values denominated in USD. In essence that means you have the right to demand possession of those shares. The advantages are many when you have ADR; you can trade them in USD, have them transferred into your name and get the dividend on your behalf, just to name a few.

Getting the right information at the right time is the key to making a successful investment. And the right place to get authentic information is at Securities and Exchange Commission. While it may not be possible to get information on every company operating worldwide, significant information is obtainable on those stocks that are traded in US. The other places where you can get information are: mutual fund firms and broker-dealers.



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