Why Do Investors prefer investing in the International Share Market? The answer to that is simple: To build a strong and varied investing portfolio. We all deal with International Companies on a daily basis. From watching movies on your favorite OTT platform to ordering things online, we are surrounded by the International Market. Now, as an Investor imagine these huge renowned companies on your portfolio. Not only will they give you a chance to get higher returns but also help you in fund diversification. And the most important thing is you don’t have to take a flight to some country to invest online. All of that can be done over a mobile phone.
There are numerous reasons for investing in the global stock market. Let us look at them one by one:
1) Difference in Performance: The stock market of every country is different. Let’s say the stock market of your country is not doing great and you invested in an International company. The ups and downs of your country’s stock market won’t have much effect on your international investment. To sum it up, if you have invested in the International Market, your investment will be unaffected from your country’s market.
2) Variation in currency: When you invest in a foreign country, you get the benefit of currency appreciation. Here’s how it helps you: It allows you to avail yourself double the benefits of currency appreciation and better markets. For instance: USD has been climbing up the ladder against the INR for a long time. Hence, the currency of a person who has invested in the US market will not depreciate and shall get high savings.
3) Safety in Investment: Investments are rewarding and progressive. However, they do have certain risks. But here’s how the international stock market gives you the upper hand. When you invest in global markets, the financial institutions of that country will protect your investment from numerous risks. That’s because if anything happens to your investment, it will reflect their market too. Apart from that, the more developed a country’s stock market is, the stronger its regulations will be to avoid frauds and threats.
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4) Open to options: Imagine yourself earning well with 2-3 investment options. Now, what if we told you that there are 2-3 more options that you can explore? Wouldn’t that make you more curious about them? Similarly, when you invest abroad you get more options to choose from. Let’s take the US as an example. When you invest in the US market, the most common investment methods are mutual funds, exchange-traded funds (ETFs), and American depository receipts (ADRs). While Mutual Funds are popular in a lot of countries, the investor gets the opportunity to try out other methods of investing.
5) Prepared for Economic Crash: The recent pandemic affected the entire world’s economy. Big or small, almost every country in the world faced its consequences. However, the consequences for all countries were not the same. A few of them weren`t hit hard while the others were deeply affected. The lesson here is that if you have your money distributed over a few countries, you may not have to go through a major financial crisis in case of an economic crash.
6) More liquidity: Another reason for investing abroad is that you can buy or sell your investments quickly. When you go for foreign investments, you get the benefit of more liquidity. This means that if an investor thinks that he needs to move on from his current investment and put his money somewhere else, he can do it with ease. The investor need not wait for months and years to sell out his investment.
So these were our top 6 reasons why one should invest in the international stock exchange. Let us know your thoughts and experience in global investment in the comments.
Also Read: How to invest in the stock market in India