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International Investment Portfolios are Different to Domestic Portfolios

If you are someone who has a keen interest in investing or you already invest in some way, then you might be familiar with international investment portfolios and domestic portfolios.


When it comes to investing, having a balanced mixture of investments can make a good financial portfolio. This would mean that your funds allocated to a number of instruments whereby you can reach your financial goals. However, you might only invest within the confines of your own country which means that your investments might have only gone as far as they can. Therefore, you might need to consider international investments. If so, what are the differences between international and domestic portfolios?


Reduced Risk


Both of these markets will fluctuate independently of each other. Therefore, if one market is underperforming, the other increases your chances of making up for any losses. So, if your returns from your domestic portfolio drop then you can turn your attention to the international market where you can seek ways to make up the difference and recover your losses. If you only had investments in the underperforming domestic market then you would have to sit tight and ride the storm until the market stabilized once again.


Take Advantage of Market Cycles


Different markets move in different ways and so, if you have access to more than one market in which you can make investments then you can take advantage of the different cycles, allowing you to allocate your funds for enhanced returns. So, if the market in your own country is expansive or overvalued, you can move to other markets that benefit from capital inflow and a higher demand for commodities.


International Credit


If you choose to invest in an international market then it can improve your access to more credit. If you have a large investment in certain countries, then it could mean that you can take advantage of lower-priced credit sources or even credit sources that you cannot gain access to in your own country.


Larger Markets


There are some international markets that will be larger and more established than those found in your own country. This means that they could offer better investment opportunities as well as a lower amount of risk. In contrast to this, you could also find a market that is less competitive than the market in your own country but this does depend on the location. This could provide you with better options when it comes to investing in the same stocks there as opposed to those in your own country.

Lewis Samuel / CI-ASSOCIATES


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