So you’re thinking of investing offshore, are you? Isn’t it a little risky? Isn’t an offshore account for someone doing something illegal? What about taxes? Where the heck do I even start? These are all very good questions and, if you’re unfamiliar with acquiring overseas assets, the very idea can seem daunting and maybe not even worth the time, effort or risk. With the sheer diversity of investment options available in a global market, it only makes sense to at least test the waters. If, after you find it isn’t for you, no one is going to twist your arm. It is your money after all. But where do you start?
Research is absolutely critical when it comes to offshore investments. If and when you decide to take the plunge there are several options a newbie offshore investor can choose. To get started, contact a local broker or even an online brokerage service. The process is fairly straightforward and, if you’re already trading with the broker you contact, should be easy to navigate. Watch out for brokerage fees, which can run high and eat into your returns if you do a lot of trading.
Another option for entering the overseas investment market is direct offshore investments. After all the initial paperwork it’s relatively simple to open and operate an offshore trading account. And by trading direct you significantly reduce any brokerage fees. You may even be able to find an overseas account to act as a multi-tasking agency for investment in multiple markets and currencies. Done correctly, this simplifies the investment process and the possible growth of your returns.
A third option for beginning offshore investors is the ability to choose a pooled investment. An international Exchange Traded Fund (EFT) or a managed fund are examples that offer smaller investors exposure to a wider range of available share than what might be available with direct access only. An ETF can be reasonably cost effective and since it’s listed on a local exchange has the additional advantage of tradability through your local broker or online service. ETF’s and managed funds are both available as hedged or unhedged options; how you address the possible positive and negative effects of fluctuating currencies on your investment value is up to you. Once you’ve decided where and how you’re investing, it becomes about managing your portfolio to address currency shifts, offshore taxation and other issues or requirements.
Many investors are intimidated with the mere thought of branching out into international investing. But as the global economic crisis continues to grow it only makes sense to explore as many avenues for financial growth as possible. Every investors situation is going to be unique just as the goals of your portfolio will probably be different. But, if you balance your portfolio and accept the risks and potential rewards of offshore investing, it can still make a difference if you shift a portion of your portfolio into overseas allocations. As always, with any investment, do your due diligence and research before you invest!