Investing

Five reasons why you should diversify your portfolio with global investing

Puneet Maheshwari

An international portfolio is a selection of stocks and other assets that focus on foreign markets and domestic ones. When it comes to financial investments in a global market, one should always make an informed decision.

International investments are considered financially secure and a very reliable form of investing. Keeping the above points in mind, here are five benefits of investing in global securities.

Fund Diversification:

By investing internationally, one’s finances will have alternative sources of stability. A diversified financial portfolio gives investors options in terms of economic fluctuations.

When the money is spread out among various countries, then market volatility in one country won’t affect other investments. It also helps in understanding various global economies and markets.

Thus, with the help of an advisor or with a little research, one can have the ability to make informed global investments.

Grow with foreign economies

Despite the current crisis, investing globally helps investors reap rewards from emerging and steadily growing economies.

Post the pandemic, economies are expected to bounce back and this is an interesting time to explore the potential of global markets.

As growth is cyclical, investing internationally enables the investor to capture opportunities from shifting market cycles of different nations.

Widening the investment horizon

Investing in global economies provides an investor with a much greater choice of companies and opportunities.

Investors can enjoy the potential of untapped, emerging economies as well as the stability provided by investments from developed economies.

Multiple choices mean investors can make the right decisions for their financial goals based on prevailing market conditions around the world.

Option of fraction trading

Even if you have limited amounts of capital, you can invest in foreign stocks through fractional trading and diversify your portfolio. Fractional stocks are a portion of equity stock.

In real terms, its value is less than one whole share. These are good options to invest in if budget is an issue.

Currency diversification

Investing in multiple economies gives benefits of currency differences and helps boost returns over time. Currency volatility can work both ways. If the exchange rate moves in your favor, you could end up earning a premium on your investment and vice versa.

Thus, an investor should never ignore world markets and should take advantage of the unforeseen investment potential global economies and stock markets have to offer.

Investing internationally is a great way to expand one’s financial horizons and one should have at least 10 percent of the portfolio allocated to global investing.

(The author is Director, Upstox)

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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