How To Invest In International Stocks

One of the best ways to leverage on the growth in international business is to invest in international stock markets.

One of the best ways to leverage on the growth in international business is to invest in international stock markets. Over the past week, we have reviewed the perks and risks that come with investing in foreign currencies.

Investing in their stock is also a great way of investing in the currency of the country whose stocks you are purchasing as you would benefit from the overall economic growth.

If after taking all the risks (like exchange rate risk) and rewards (like high returns) involved in foreign investing, you are willing to take it on, then there are various ways to go about it and all of these ways vary in their peculiarities, risks and opportunities.

Here are a number of ways you could go about it depending on your risk tolerance and your experience with investing.

Foreign Direct Investing

The most apparent way is to invest directly. In order words, you can buy foreign stocks directly in the country of your choice. To do this, you can ask your broker to open a global account for you if the option is available or you can simply open an account with a broker in the country you want to invest in.

There are, of course, risks attached to this method. The first thing is the fact that the process is more complicated than it seems as it involves currency conversions, has a few tax implications, and a lot of technical assistance.

If you decide to reach out to an international broker while you’re in Nigeria, then you will also be at the risk of meeting fraudsters who are not registered with relevant exchanges. However, if you are based in another country like the US, then you are in a better position to invest directly from there.

Mutual Funds and ETFs

For new and inexperienced investors especially in foreign investment matters, a great alternative is to invest in a fund. The first advantage of this is that with a fund, you can define your outcome from the type of stocks you want to be investing in as well as your target objectives.

For one, you can define whether you want to invest for long term growth of for dividend earnings. You can also determine your risk appetite and if you are interested in speculative investments or if you want something more conservative.

They will be more expensive than mutual investments made in Nigeria but they too are capable of losing value. It could be a mutual fund or an international exchange-traded funds (ETF). They are great for your portfolio but you must beware of the costs associated with them.

Invest in a Multinational

Another interesting way to invest in international stocks is to invest directly in a multinational. There are many of our domestic companies that have most of their revenue coming from other countries.

While this might not give you the full benefits of profits and diversification, you enjoy some of the gains of the company’s overall operations and growth from being part of a bigger economy.

Written by Lawretta Egba.