When Covid-19 raged through the world, many of us had to accustom ourselves to the notion of working from home. Alongside this, many of us started to reassess some of our investment portfolios, exploring different investment instruments and opportunities in the overseas markets.
Investing in the overseas markets that you might not have enough knowledge on, might seem daunting. However, with the right tools and knowledge, multi-market portfolios can prove to be the most effective way of portfolio diversification, allowing one to not putting "all your eggs in one basket".
Quick things to keep in mind when expanding your investment portfolio across the markets
One of the main reasons seasoned investors diversify their portfolios is by hedging their funds differently, spreading their risks. Should a given country's market take a tumble due to an ailing economy or political strife, not all of one's investments would be at risk. Investors also look to diversify their portfolio to capitalise on having a slice of the pie in an up-and-coming market that shows great promise and growth in the future.
There are also many ways of investing your hard-earned money. Whether you choose to invest in stocks, futures, exchange-traded funds (ETFs), real estate investment trust funds (REITs), the possibilities are endless.
SEE: Addressing the need for data and speed – Tiger Brokers forms strategic partnerships and launches 'Fund Mall', a one-stop-shop for investing in global mutual funds
Understand what soup you are getting into
It is important to understand the pros and cons of different international exchanges to meet your risk appetite. For example, compared to the Singapore Exchange, the New York Stock Exchange (NYSE) is 30 times larger, while the Hong Kong Exchange (HKEX) is 5 times larger. This might mean that while these markets have unmatched liquidity and flexibility for portfolios, they are far more volatile to market changes and prone to clashes.
Another draw for investors to diversify their portfolios internationally is that they would be able to invest in companies and brands they interact with daily —whether this means Apple, Amazon or even Alibaba. One can also find a vast amount of available data out there to make well-informed decisions.
Ways to diversify your portfolio
Beyond language barriers and currency conversion, investing overseas can be easier than you can imagine. One of the easiest and most common ways to invest in a foreign market is to purchase ETFs or mutual funds that hold a basket of international stocks and bonds. These options are one way to offer investors a highly diversified foreign portfolio to get started with.
Mutual funds are actively managed by professional investors – which makes them more pricey – while ETFs are passively managed with holdings on a pre-existing index – making them more affordable. The rule of thumb is that higher risk funds will have a higher rate of returns, but this will be entirely dependent on your risk appetite. Similarly, established companies that are on international markets make for safer bets, while younger and more dynamic companies may provide undervalued opportunities that come with higher risk.
At Tiger Brokers, investors can now join the trading platform as an Ace Trader where investors can get to enjoy 30% commission and free stocks. Investors are also able to stand a chance to win stock vouchers and birthday gifts on the different tiers of being a Tiger Brokers trader.
The right tools in making your investment journey into the overseas markets easier
When starting any journey, it is essential to be equipped with the best tools to help you make a sound decision when it comes to investing.
Content is king. Download your favourite news tracker to keep abreast of international news and political or economic situations that could impact markets. This will aid in your decision-making efforts when looking out on where to invest and what investment instruments to invest in. Besides, invest the time to learn about different companies that you are interested in investing. Lastly, learn how to fully utilise your mobile brokerages’ features, including charts, markers and indices to help you easily compare and track different companies – much like the feature available on Tiger Brokers.
The launch of Tiger Brokers’ Enterprise Welfare for Employees also paid homage to corporate employees. They can enjoy exclusive benefits such as 6 months commission-free trades and a post deposit trade voucher up to $200 when they open a Tiger Brokers account.
This article has not been reviewed by the Monetary Authority of Singapore.
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