27 Mar To Invest or Not to Invest Overseas
Savvy entrepreneurs do not limit their investments to American holdings. Expanding investing options to include global options provides entrepreneurs with a broader range of revenue generating sources. However, investing overseas comes with two major issues that can disrupt the most carefully conceived international portfolio: currency risks as well as inflation risks.
First, currency risks are common throughout the world. Additionally, the devaluation of the United States dollar due to the explosion in national debt creates inflationary risks. Conversely, a rising dollar against other world currencies causes a decline in the returns for American investors.
Overseas Investing vs. United States Stocks Investing
So with these two risks in mind, what does this mean for American investors and entrepreneurs? The numbers do not lie as international stocks continue to steadily lag behind American stocks over the past five years to a decade.
What Do Investor Experts Think?
Entrepreneurs who want to invest overseas certainly have the opportunity to earn higher returns. They also have the option to spread the risk of investing in American stocks with other entities.
However, it’s also important for entrepreneurs and investors to monitor what the financial experts have to say. Jim Hamel, manager of Artisan Global Opportunities emphasizes that many international price-earnings ratios are currently low because the P in the equation has moved up sharply, but the E has not moved as quickly. “We would have been saying the same thing about the U.S. market in 2010 and 2011,” Hamel said.
Entrepreneurs Investing Overseas Can Find Gems
Depending on an entrepreneur’s investing methodology and philosophy, investing overseas can mean larger returns, if they can find a real gem. In fact, some experts have seen a lot of success and larger returns by investing overseas. Focusing on individual stocks rather than spreading the investing risk across multiple economic sectors is one approach.
However, regardless of investment strategy, philosophy or approach, entrepreneurs and investors can work with an investing consultant or a crowdfunding firm to partner with other entities and investors to ensure maximum returns to help determine if domestic or international investing is right for them.
As discussed above, while many investing and financial experts have witnessed larger returns from investing overseas, there are still great risks in doing so. Investors have the potential to also lose a good amount of money due to inflation and currency risks.
However, choosing an investment strategy and/or approach is half the battle. Working and partnering with a crowdfunding and investing consultant is the other half. Learn how a professional crowdfunding and investing firm can help entrepreneurs and investors with their investing needs.