Where in the World Should You Invest Your Money?
International investing has become a popular option for many looking to capitalize on their money. In general, international investments generate higher rates of return than do funds invested domestically. However, before you consider global markets, keep one thing in mind - higher returns usually equal higher risk.
Minimizing the risk as much as possible is usually what most investors look for, though some have more of a risk tolerance than others. Before you explore your investment options, it is important to ask yourself just how much risk you're willing to take with the money you contemplate investing. If you can't afford (emotionally or practically) to take a loss, it may be better to stick with safer investment vehicles. If the money you're investing is your "play money" and you won't be upset if you lose it, by all means seek out high-risk/high-return investment options. Here are some popular global options.
Investment in European-based companies fell out of favor a bit recently as a result of political uncertainty. Once we lived through Brexit and France and saw that it wasn’t the end of the financial world as we knew it, the economic climate once again began to favor investments in European companies.
The Euro is strong relative to the U.S. Dollar, unemployment in the Euro-zone has fallen dramatically, and economic growth in the region is quickly catching up to that of the U.S. Manufacturing companies in particular are enjoying exponential growth and are, in fact, facing labor shortages as demand for products continues to increase.
Like the U.S., Europe, and the rest of the world, Japan was hit hard by the economic crisis of the last decade. They're recovering, but slowly. Because their recovery has been slow and steady, there's plenty of room for growth. However, the population of Japan is aging, and they have seen limited industrial and business expansion relative to that seen by other markets. Additionally, the demand for their manufactured goods is low due to the fact that they are priced higher than goods manufactured elsewhere. In short, investment in Japanese companies has the potential to be financially rewarding, but a smart investor will take note of the challenges faced by this market.
"Emerging market" is the politically correct term for "previously underdeveloped country that's just now getting into the game". India and China are the biggest contenders in this space.
When you think about China, don't just think about inexpensive clothing and housewares. Internet giants like Alibaba, for example, are leading an economic boom that is just getting underway. Risk factors for investments in Chinese companies include a heavy debt load and a possible trade war with the U.S.
India has been a leader in the tech space for several years and there is no indication that they'll be slowing down. As their presence in the tech market increases and more and more households in India reap the benefits of this newfound prosperity, demand for goods and services will continue to increase, making investment in India an attractive prospect.
Keep it Local
Why not keep your money in your own country and support domestic growth? Consumer confidence is high in the United States, unemployment is lower than it has been in a decade, and the real estate market is recovering nicely. Consumer-facing businesses in particular are enjoying robust growth and online retailers such as Amazon are growing at a dizzying rate. On the down side, U.S. investments are expensive, and since the growth has been going on for a while, the potential for tremendous gains may be limited.
Regardless of where you want to invest, or how much, it is a good idea to speak to a financial advisor before sinking your hard-earned cash into any investment. Like any important decision, the decision to put your faith and your money in any investment vehicle which could show a negative return should not be made without gathering all the facts. Do your homework, talk to a professional, and above all, keep an eye on your investments. Remember, "buy and hold" is an investment strategy. "Buy and ignore" is not.