The Better Way to Invest

< Back to Main Index

Pros and cons of investing in an overseas market vs Australia

March 23, 2016
1 person likes this post.

Have you ever wondered if the grass really is greener on the other side? Of course you have. Experienced and new investors all have the same drive when managing share market investments – to grow wealth. The hard part is figuring out how to best allocate your assets, and where to invest. Diversifying your investments can have a big impact on your financial growth long-term, so let’s take a look at how international markets compare to Australian investments.

Pros of Investing in Overseas Markets

  • Exposure to international markets enables access to a larger and more varied investment opportunities
  • Many countries offer tax incentives to foreign investors
  • You can protect your assets through restructuring the ownership through trusts, foundations or through transferring ownership from people to other legal entities. In doing this, you are no longer susceptible to seizure as an individual owner could be
  • Many Australian investors are cautious about entering into an overseas market, which means that there is an opportunity to outperform your Australian counterparts
  • International ETFS can be an attractive way to obtain the benefits of diversifying overseas while reducing the risk a direct investment or challenges of a managed fund
  • International investments are an effective way to diversify outside of the Australian equity market which is primarily made up of materials and financial sectors

Cons of Investing in Overseas Markets

  • The costs involved in setting up accounts in unfamiliar overseas markets is complex and not cheap
  • If you are investing in international equity managed funds, the fees can be higher, making it less attractive to Australian investors
  • You need to be fully aware of changeable tax laws, to make sure that earnings from your overseas investments are protected

Pros on Investing in Australian Markets

  • It is easier to stick with what you know, and not risk your finances in unfamiliar markets
  • Shares are a liquid asset, making it easy to buy or sell in Australia when you decide it is time to take action on your portfolio
  • Information about companies and share prices are easily available in the news, and financial websites making it easy to interpret how your portfolio is performing at any time

Cons of Investing in Australian Markets

  • Over the past decade, Australia has underperformed most global markets, ranking 37th out of 73 global exchanges in December 2015
  • As the resources opportunity is evaporating in Australia, and the Aussie dollar is lowering in value, Australian investments are at risk becoming an equity growth backwater

Investing in individual international shares is still quite an elite activity in Australia, as the execution can be tricky. However, if you do your research and employ a sound investment strategy, you can enjoy the benefits of diversifying your portfolio in a wider range of shares. Are you ready to start trading internationally? Share Wealth Systems trading software, SPA3 for NASDAQ offers everything you need to take complete control of your investment portfolio, with risk management tools to protect your trading capital in the US market.

Like our blog? Share the love!
  •  
  •  
  •  
  •  
  •  
  •  
  •  
1 person likes this post.

Leave a Reply

Your email address will not be published. Required fields are marked *