Potential in Investing in International Stock Markets
May 23, 2022
Having a diversified investment portfoliois a great advantage in today’s world that is characterized by increasing globalization and market uncertainty. A broad vision and a global diversificationof the investment can help to overcome the ups and downs of the stock markets in the long term since volatility is an inescapable element of the financial market.
A clear example of this variability in the markets are the falls that the coronavirus and the Russia-Ukraine war brought to world stock markets.
A diversified portfolio is one way of coping with this market instability. Well, by investing in a diversified way, we bet on being able to compensate the losses of some with the profits of others and minimizing the risk.
The diversification of our portfolios can be based on both the type of market and the country or region in which we invest, and can of course combine both aspects.
The combination of different markets and global diversification when investing leads to a greater possibility of long-term financial success since when some fluctuate, others increase positively.
The strategy of investing globally can be favorable in several ways. In addition to strengthening an investor’s portfolio, it allows them to get high returns on the investment made. The strategy can also be a way to have more diversification and protection, allowing you to access larger companies than domestic ones.
Much has been said about investing abroad. Have you ever thought, for example, of participating in the growth of companies like Apple, Google, Amazon and many others? Today, this has become a reality for every investor.
However, before allocating part of your investments in assets with international exposure, it is necessary to think about why it is interesting to choose this alternative to compose your investment portfolio.
Dollarize the Wallet
There are advantages to having part of the portfolio exposed to a strong currency, such as the Dollar. When investing abroad, there is the possibility of obtaining additional gains when the Dollar appreciates. This is also a strategy used to protect the investment portfolio against exchange rate variations, for example.
Those who invest only in the stock market of a particular country may find it interesting to seek new investment opportunities abroad. After all, a diversified portfolio can result in higher earning potential and lower risk.
When investing abroad, you can have access to numerous large companies or types of operations that do not exist in your country. Regardless of whether you aim for the long or short term, there are several alternatives.
There are different factors that affect the fluctuation of the different financial markets, such as the GDP of each country, interest rates, currency exchange, the profit of companies, or different political situations.
These variables determine the development or decline of the economy of the countries, for this reason, Global Investment helps to reduce the risk of the portfolio.
But diversification is not only a risk management tool but also a way to search, beyond the national stock market, for sources of returns in international stock markets.
Interested in going global with your investments? Consult the specialists of RKFS and become an international investor by bringing in your trading account the financial products of different companies belonging to different countries.