Investing in your home country may seem like a safe bet since you are familiar with the environment and the regulations, but could you be missing out on not investing overseas. Other growing economies may also have a lot to offer in the grand scheme of investments.
It may be prudent for investors to have a diversified portfolio, and since the US market has already performed exceptionally, it might be good to spread out the investments. Companies in countries like China and India are rapidly growing; though a bit shaky at the moment, their markets continue to show promise for the future.
With the continued growth of such markets, taking a detour to other markets may just be the right move for your business. Here are six of the main reasons to invest outside the US.
1. Broader Market Exposure
If you have already made a substantial investment in the US market, it may be wise to diversify your holdings. Diversifying your portfolio could help hedge against economic uncertainties.
Investing abroad could help reduce the home country bias common in most portfolios. Also, investing overseas has led to better risk-adjusted returns than investing domestically in the US market. Your brand could take on a lead on new and growing economies which are still under the radar.
2. High Rates of Growth Abroad
Some of the most exciting growth environments exist in Asia and Europe. Many may argue that these emerging markets are where the action will be for business in the future. There is a technological boom in Europe, improving financial conditions, and interest rates have bottomed out. High-interest rates in the US have also pushed investors to look for other destinations for their investments.
Asia has seen economic growth at a high clip over the years, and this has not been limited to just China and India. Such interest has been matched by other Asian countries like South Korea, Taiwan, and Singapore; these countries are quickly emerging as strong competitors to the US, if not better.
3. Exchange Rate Benefit
Investing overseas can be a profitable proposition. Exchange rate fluctuations could add value to your existing portfolio. Since the value of your investment will change according to the exchange rate, currency fluctuations should not affect the investment. Investing abroad has led to better risk-adjusted returns than investing domestically in the US market. The latest dinar intel also shows that investing in Middle Eastern countries could prove beneficial with the continued rise in inflation.
4. There Is a Bigger Market Overseas
The US market is currently saturated with investments, while overseas markets still have a lot of growth potential. The US market has reached a size where it is difficult for small and medium-sized businesses to find buyers. With more than 60% of the world's market outside the US, there is less competition to get the best deals. Additionally, with the availability of working from home models, companies can expand without worrying about manpower.
5. To Cash In on the Digital Currency Opportunity
As fiat currency loses value, the move towards digital currency and Bitcoin is becoming unavoidable. Moving to alternatives like Bitcoin is far cheaper and more accessible than traditional currencies. This will result in a boom in investment and new technologies offering a safer solution to current banking systems. The likes of PayPal are already moving into this area with Bitcoin, while other platforms like Ethereum provide better returns than regular currencies.
6. Avoid Taxes Overseas
One of the most significant benefits of investing overseas is the potential for lower tax rates. Some countries and states have a cap on how much you can earn before your income is taxed, but there are no limits in other countries. With offshore account investing, investors can avoid being taxed twice and bypass capital gains taxes that come with selling stocks in the US.
Investing outside the US diversifies your portfolio and creates a more attractive investment opportunity. Emerging markets have a lot to offer. Global economies are growing, and this could make investing overseas a good option.
As a business owner, you need to keep abreast of all current happenings as they can impact your profits, losses, and investment success.