From the dawn of the internet savvy generation and information dissemination accessible at the tap of a button, the world has started growing smaller every passing moment. With international mergers and acquisitions happening all over the world, growing social media communication, and the warm embrace of a multi-ethnic community, Singapore has become one of the perfect examples of the term ‘Global Village’.
We keep hearing people talk about how the world is turning into a global village with so much of information transcending borders. It has become easier for people to travel and explore other parts of the world. If not that, then anyway everyone has the whole world on their digital screens thanks to the mighty internet.
However, taking virtual tours of your dream destinations on Google Maps or being a part of a multinational corporation is merely scratching the surface of what a global village is supposed to be. So what is the next step in the ladder of the world becoming a global village?
The answer is international investment. Although Singaporean investors typically opt for straightforward domestic investment opportunities due to the fear of the unknown and the assumption that international investment is for entitled millionaires, it is not as daunting as it seems once you approach it correctly.
For those of you still skeptical, here are 5 key arguments in favor of international investment for your consideration:
- Turbo-Powered Growth
When it comes to the stock market, you may be more comfortable in investing in your own country. However, your favorite stock may not be the best performer at all times. Singaporeans have the fortune to be one of the most prosperous economies in South East Asia and the per capita incomes are highly impressive compared to many of the other countries surrounding it. Thus, it is smart to look at international stock markets that might be doing much better than your own.
Investing in developing economies like Vietnam, India, Sri Lanka, Thailand, etc. can deliver remarkable returns on investment due to the breakneck pace of economic growth.
- Risk Mitigation
With global diversification comes a reduction in risk. Yes, it is true that it is risky but it is a little less risky than just putting your money in one place. If your investments are diversified globally, chances are that some place might be doing well when the other one is not. This creates a balance and your overall risk reduces.
- Openness to All Types of Investors
It is a misconception that international investment is a rich man’s business. It might have been so earlier, but this does not hold true anymore. Small investors are just as welcome as big ones.
Thanks to the internet and international funds, also ETFs (exchange traded funds), you do not need to be an influential billionaire with extraordinary networking savvy to make international investments.
- Currentness of Currency
You need to keep in mind the current value of the currency of the place you are investing in. Your returns are majorly dependant on the value of the currency, unlike in home investments where your returns are only dependant on the stock price and the dividends that you receive.
Thus, the currency plays a huge role in the positive or negative impact on your investment. Wily international investors always do significant research on the short-term and long-term gains in the currency of a country they choose to invest in.
- Global Awareness
Even if you are restricting yourself to Singaporean stock investment exclusively, chances are that the values of the stocks of the company that you choose are influenced by the global market, depending on their performance overseas.
This holds true especially when it comes to the pharmaceuticals and the automobile industries. Hence, every investment should be made after analyzing even the global market along with the local market.
The moral of this story is that international investment is as risky or safe and as difficult or easy as any domestic investment. What is essential is proper knowledge about the investment about to be made. Since the line of international and domestic is now blurry anyway, the more global knowledge you have, the better your ROI will be.
After all, the fates of domestic and international markets are tied together and they cannot exist without each other. With a global stage at your disposal, the number of legitimate money-making opportunities you encounter will be far greater than you would get fishing in your local pond.
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