If working from home has made you experiment more with your investment portfolio, it may be time to think about expanding your options to include overseas markets as well.
While investing in overseas markets that you may have only heard of and may be unfamiliar with might seem daunting, there are some relatively easy strategies to keep in mind to successfully grow your investments.
With the right tools and knowledge, multi-market portfolios can prove to be very beneficial for your investing needs and ultimately, where you want to be and see your wealth grow.
1. Quick Things to Keep in Mind
One of the main reasons seasoned investors diversify their portfolios with overseas investments is to spread their risk. This means that should a given country’s market take a tumble due to an ailing economy or political strife, not all their investments would suffer as a result.
Many investors also diversify their portfolios to capitalize on having a slice of the pie in an up-and-coming market that shows great promise and growth in the future.
This doesn’t mean that you should rush to drop your current investments to buy into foreign markets. Financial experts often recommend that investors allocate 5 percent to 10 percent of their current investment funds to dabble in overseas markets.
This allows one to understand the workings, nuances and intricacies of what it means to invest in an international market.
2. Different Ways of Investing
There are also many different ways of investing your hard-earned money. Whether you choose to invest in stocks, futures, exchange-traded funds (ETFs) or even FX, the possibilities are almost endless.
First and foremost, it is important to understand the pros and cons of different international exchanges so that you are able to make informed decisions or decisions that you are comfortable with.
3. Unmatched Liquidity
For example, The New York Stock Exchange (NYSE) is 30 times larger than that of Singapore’s, while the Hong Kong Exchange (HKEX) is 5 times larger than Singapore’s. This might mean that while these markets have unmatched liquidity and flexibility for portfolio options, they are also volatile and can be prone to crashes.
Another draw for investors to diversify their portfolios internationally is that they would be able to invest in companies and brands they interact with on an everyday basis — whether this means Apple, Amazon or even Alibaba. Such big marquee names also mean that there is a wealth of information out there to make well-informed decisions.
4. An Exciting Way to Diversify Your Portfolio
Investing overseas is easier than you think, even though many think that one can be marred by language barriers or currency conversions. One of the easiest and most common ways to invest in a foreign market is through purchasing ETFs or mutual funds that hold a basket of international stocks and bonds.
This also provides investors with a quick and highly diversified foreign portfolio to get started with.
5. The Rule of Thumb
Ultimately, what funds best work for you also depends on your objectives. Generally, mutual funds are actively managed by professional investors — making them more expensive — while ETFs are passively managed withholdings on a pre-existing index — making them more affordable.
The rule of thumb is that higher-risk funds have the potential for greater returns, but also often comes with less stability. Similarly, established companies that are on international markets make for relatively safer bets, while younger or more dynamic companies may provide undervalued opportunities that come with higher risk.
6. The Right Tools Make Your Overseas Investment Journey Easier
When starting any journey, it’s always wise to be equipped with the best tools to make your journey easier and more convenient.
Download your favorite news trackers to keep abreast of international news and political or economic situations that could potentially affect overseas markets. This also lends itself to your decision-making processes when you are looking out on where to invest and what to invest in.
7. Features Available on Tiger Brokers
Take the time to learn about the different companies you are interested in investing in, whether it’s through research or convenient widgets like Google Alerts. Lastly, learn to fully utilize your mobile brokerages’ features, including charts, markers and indices so that you are able to easily compare and track different companies, and even look up on historical data — much like the features available on Tiger Brokers.
At the end of the day, it is important to have a healthy risk appetite but that also doesn’t mean that you cannot make informed decisions. A good place to start is in markets you have an affinity towards or companies that are particularly enticing to you and your values. Diversifying your portfolio is actually good to minimize risk exposure, and having the right tools is just the first step in this life-long journey.
At Tiger Brokers Singapore, take advantage of our sophisticated tools to make your money work harder for you. With everything within the reach of your palm, we aim to make your investment journey easy, whether you’re new or a seasoned investor. It is also a one-stop trading platform for investors to invest in different multi-asset classes globally.
At Tiger Brokers Singapore, we treat all our clients as privileged clients, with no tiers to segregate you. For those of you who are looking for convenience and accessibility to the global financial markets, you have reached the right broker. Time waits for no man – click here to download Tiger Trade now!
