National boundaries have usually not dissuaded investors who want to most effectively use their investment capital. In fact, those with expertise in offshore investing state that about 50% or a little more of your investment portfolio should be based in foreign markets. If you really want your money to work for you, you`ll eventually see that you need to invest in foreign markets to get above average returns.
Once you think global in regard to your investments, it will make sense to diversify, and not have your investments based in just one market or country. Global investing outperforms US-only investing and also reduces risk to your investment portfolio. A globally diversified portfolio is generally much better at withstanding bumps in the financial road than a geographically discrete portfolio is.
My observations have led me to conclude that major stock markets around the world each had downward trends approximately every 12 years, at different times. Therefore, if you globally diversify your money, you`ll be able to withstand downturns and have your money working for you all the time. If you invest offshore, you`ll increase opportunities for investment, improve returns and diversify your risk. As an example, the Morgan Stanley Capital International Index has 21 stock markets around the world, including Japan. Most of the developed markets in Europe and Asia have posted a 15.1% compounded annual return in the 25 years since this index began in 1970. This is as compared to a return of 10.7% in the same time period for the top 500 companies traded on the New York Stock Exchange, as measured by Standard and Poors.
In addition, 13 of the 21 Morgan Stanley Capital International Index markets did better than the US market quite substantially, at the same time. The Japanese market alone had 20 times the return of the S and P 500 between 1948 and 1993.
If a smart investor wouldn`t put all of his or her money into just one company, why would he or she put everything into just one country or currency? How strong is a given country`s currency? This factor will have an impact on your buying power. Property prices also influence a country`s inflation and interest rates. Additionally, income, purchasing power and a country`s living standard are also good reasons to invest outside of your own country of residence.
What are other merits of foreign investing? Let`s take a look:
Let`s say that in 1996, a US investor chose to have only US-based investments. By doing that, he or she didn`t benefit from:
- All 10 of the worlds biggest construction companies- All 10 of the world`s biggest banks- 8 of the world`s top 10 chemical companies- 8 of the world`s top 10 machinery and engineering companies- 7 of the world`s top 10 car companies
If you want better than average returns, take some time to learn about offshore investing. Unfortunately, since most first-time investors simply want to make money as fast as possible, they don`t do that well and could do better.
There are usually just two ways people lose money in offshore investing. These are greed and lack of knowledge. While you can learn about offshore investing and thus correct the latter problem, focusing on Greater Returns Each and Every Day (GREED) is only thwarted with self-control.
Superior returns can be had if you don`t restrict opportunities geographically. You might be put off by the fact that you may easily know more about it than your investment professional, though. Unfortunately, many shady characters just adore the greedy, unsuspecting investor (although this is not as true in the case of mutual fund). To avoid being taken advantage of, keep a few things in mind. If it sounds too good to be true but you can see that it`s possible, it might be possible. But if it`s clearly an impossibility, stay away. Be cautious and verify credentials for all. Use a `due diligence` service if you don`t have the knowledge to handle this yourself. If you get advice from an accountant, financial planner or broker, ask them where they invest. If they won`t tell you, say good-bye. The best expert will have his investments somewhere that would be beneficial for you, too. This also ensures that they have used this particular kind of investment vehicle themselves, or at know something about the area you want to invest in.
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5 Steps To Opening An Offshore Bank Account
If you`re investing for the first time in an offshore account, it can be confusing. You must choose a reputable bank and handle the ins and outs of offshore accounting procedures. There are no first time investing procedures to follow. However, the following five simple steps will give you the information you need.
3 Major Reasons To Bank Offshore
One of the biggest decisions you may ever make is selecting a bank, so knowing all the facts is very important. Many people are choosing to open offshore accounts. Why does offshore banking seem to be so great? The 3Ps, or privacy, protection and profit are the three major reasons to consider investing offshore. We will look at them in this article.
15 Things You Should Know About Offshore Fund Managers
Do you know the person managing your money? If you don`t, you need to; knowing who is managing your fund is as important as knowing where your money is. It`s absolutely essential, and you should not hesitate to ask as many questions as you wish so that you`re sure you`re comfortable with where your money is being invested.
