Investing In Foreign Markets
With the US stock market still reeling from the uncertain economy and where it may be headed, many investors are at a loss on where their next opportunity may come from. While it may be still relatively safe in putting money on the US stock market, there are other potential avenues available for investors that may offer better options. For example, looking into foreign markets may offer many potential opportunities.
Foreign markets have been relatively neglected as an investment opportunity for years. One reason is that the US stock market in the past few decades has remained quite stable despite the occasional downturn. But the recent serious blow in the US economy has many investors getting a different outlook for the US stock market in general. Investing in foreign companies seems to offer some investors better opportunities.
Some things may be stopping some investors from putting their money into foreign markets. One is lack of enough information regarding most foreign investments. Another is relative inexperience in handling investments from other countries. While most investors may be hampered by these reasons from putting their money where growth opportunities abound, there are also alternatives available. Although they these alternatives may not offer a direct means to invest in foreign investments, they offer the next best option available, if not the safest for those who are inexperienced in such matters.
Mutual Funds
Investing in mutual funds that focus on foreign investments may be a good way to start investing in foreign markets. The investor gets a small stake at a professionally managed portfolio made up of international investments. The risks are reduced up to a certain level. It also provides the investor with help in entering international markets for possible opportunities.
American Depositary Receipts
American Depositary Receipts or ADR’s are securities that represent securities of a non-US company. ADR’s trade in the US financial markets. They are priced in dollars and are traded in the market just like regular stocks. ADR’s are another option available for investors to start investing in foreign securities in a market that they are already accustomed to.
Exchange Traded Funds
Investors can also invest in Exchange Traded Funds or ETF’s that focus on international investments. ETF’s work similar to a mutual fund in that they represent a portfolio of different investments. The only difference is that ETF’s are traded as stocks. Investors can buy and sell them throughout the trading day and possibly profit from them based on the difference between the buying and selling prices. There are ETF’s that focus on investments on a single country or investments from all over the globe. Investing in Exchange Traded Funds is another way of taking advantage of growth in foreign markets.
Multinational Company Shares
Another way of taking advantage of foreign markets is by investing in US companies that has a major presence in other countries where they get a majority of their revenue. It is an alternative to investing your money in a foreign market. As growth in foreign markets continue, so does the US companies with presence in these areas of the world. In a way, you are getting some exposure into foreign markets while riding on the back of a US company. It allows you to invest your money with lesser risk.
Investing – GuideTo.Com
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