Are You Thinking About Investing Internationally In Stocks?

One of the big challenges an investor faces on a daily basis is market risk.

Working hard to satisfy your investment goals while at the same time limiting your risk and exposure to volatility takes a solid strategy, reliable information, and a patience like no other.

Sure, we've all heard stories of the home run hitting investor who laid his money down and made a "killing" in a stock.

These are the kinds of tales that grab the headlines and attract the interest of the "fast buck players."

" Steady as she goes" would be a more realistic view of how to invest. It is difficult to just wait for an investment to climb in value, but without patience and the fortitude to keep a long-term mindset, you're probably going to miss out on a solid move.

Using what could be called a butterfly approach and jumping from one hot stock tip to another can be the riskiest investment play of all.

Being patient isn't enough though. If what you are investing in is oozing with risk, patience may not be the key to success. You devote your patience to solid investments and those with limited risk.

If you are an investor or contemplating investing in the various financial markets and instruments available, you must get into the flow of information.

Catching a thirty second or two minute report mentioning a company making an innovative new product that is going to revolutionize the industry shouldn't be considered a call to action.

If you don't understand what you're being told to invest in... don't invest. Not having an understanding of what your money is invested in is comparable to sitting down at a high-stakes poker game without understanding the markings on the cards.

If you do not have basic investment knowledge to guide your decisions, your chances of making the right choices are limited.

It's simple; have a basic knowledge of how the markets work; have an understanding of what it is that you are interested in investing your money in; and most importantly, understand the upside and downside scenarios, in other words, what are the risks and more specifically the risk of losing your entire investment.

If you feel that the risk of putting all your investment dollars in the stock markets in the U.S. is too great, perhaps diversifying into stocks from other countries is worth examining.

The mindset for many is that if the stock markets at home are suffering, there may be markets abroad that offer opportunity, because bad economic news on one front may be great news in another part of the world.

A quick example of such news would be the trade figures. If the U.S. is witnessing a rise in imports month after month, you have to ask yourself; where are we importing from and what are we importing

This could be the clue to invest in a company that consistently exports to the United States and the amount of its exports (in dollars) keeps rising.

On a more basic level; if a football team is having a terrible season, there probably is a team that is having a great season.

Think of it as; when two teams compete somebody wins and in world economies, someone's bad economic news usually translates to someone else's fortune.

When you read a headline or story about some bad economic figures... ask yourself, "Who is on the other side of this"

Who did well that resulted in the U.S. doing poorly If the U.S. did great, who suffered Is this a trend Is the company or industry showing real value in their stock price now

Could this be just a fluke and there's a buying opportunity

It pays to look past the headline and the story and into what made the story. Everybody hears news, but going the extra step and finding out what caused the news will give you better market insight.

If you think that you want to diversify in the international markets, you have to take into consideration what you stand to gain versus what you could possibly lose.

Currency fluctuation can boost a return on an investment. If the currency of a country you invest in rises against the dollar, when it comes time to sell, you'll get more dollars.

However, that can also work against you; the dollar rises against the currency of the country of the company you have invested in... and you'll get back fewer dollars.

Obviously, you want your stock to rise and a sweetener is getting a dividend (if it pays one) in the meantime. Keep in mind, markets rise and fall and companies announce dividend suspensions, eliminations, or reductions.

This can happen in any of the world markets, not just at home.

Before you get too excited about international investment, you should understand that the U.S. isn't the only country where interest rates rise and fall.

The currency issue I mentioned, but worth mentioning again, currency fluctuations can hurt you.

In the U.S., you are fortunate because companies that list on the exchanges have to reveal a lot of information about themselves before they can be listed.

The rules aren't the same all over the world, so investigate on your own, rather than trusting only what is offered to the public.

This would be of particular interest when it comes to the accounting methods of the companies and how they compute corporate and individual investor taxes.

Committing a portion of your investment dollars can be exciting and rewarding, but if you are not a savvy investor with a deep understanding of world markets, currency exchanges, tax laws, accounting, and company reporting practices, your personal investment risk will be very high.

I always suggest seeking professional advice when making any investment, be it; financial instruments, real estate, precious metals, or any of the other opportunities offered.

Take note, if you want to invest internationally there are alternatives to going directly to a foreign market and opening an account.

You may wish to investigate the various international mutual fund offerings, foreign companies that list directly on the U.S. exchanges, or those that are offered through what are called American Depository Receipts.

The foreign markets always look inviting when our markets at home are showing some volatility, but with so many sectors in the U.S. markets to choose from, it's not always smart to jump the fence into the yard with the grass that looks greener.

The more knowledgeable you are about investing, the better investor you will become. Multiple resources will provide varied opinions.

What one analyst loves, another analyst may dislike. Do your own research and do a lot of it, before jumping into the stock market because someone told you it's the thing to do.

" There are only two ways that you make money; you work and your money works... make your money sweat." -Lazz Laszlo

About the Author

Lazz Laszlo is a former Investment Executive and Radio & Television Financial Reporter with many entrepreneurial endeavors to his credit. He spends his time enjoying life and writing about business, travel, retirement, strategy, and pleasure. To learn more visit the website; http://www.925-wage-slave-alternatives.com and Lazz's blog is at; http://Thailandtaleteller.wordpress.com

Source: Investment Articles on ArticlesTree.com





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