Unfortunately, there are many common myths and misconceptions about foreign investing. Many people and even big governments do not understand exactly how it works and this leads to myths and mistakes as well as lost money that was invested for many people.
Below are some myths about foreign investing and the answers to help you clear up any confusion. This in no way encompasses all the myths and misconceptions regarding foreign investing. It is just a brief intro to the topic. If you are serious about foreign marketing, you should learn all that you can.
Only country leaders and government participate in foreign investing- While country leaders and governments do participate in a lot of trading with other governments, there is also room in the market for the small time or individual investor as well as fund companies and more.
Foreign Investment creates new enterprises, gains or expands markets and stimulates new research. – While in some cases this happens, it does not always. In fact, most foreign investment is directly towards things like buying profitable existing public enterprises and firms.
Foreign investing reduces the deficit by providing a profit- This is not really true. Most countries are in debt to other counties. Foreign investing between countries is actually more like foreign trading or borrowing. It does not yield a profit to countries and governments the way it does individuals who invest in stocks and mutual funds and similar.
You have to be an expert to participate in foreign investing- While it can help the individual investor, it is not a requirement. There are ways of diversifying your portfolio without knowing everything about foreign markets.
Every good portfolio must have foreign investments- It is suggested that a well rounded portfolio be diversified and many advisors suggest at least 10% go to foreign markets and options but it is not mandatory to have a successful portfolio. There are ways of getting the diversity you need without going to foreign markets if you choose.
It’s hard to make profit in foreign investing- Many people don’t seek foreign markets because they feel they are too risky or that they will lose the money they invest. While all markets contain their own level of risk and foreign investing has that as well, it doesn’t mean that there isn’t a way to track and predict that risk and choose your investments accordingly.