It’s fair to say that investors cannot attempt to apply their funds into every single market and economic zone at once. While huge investors with billions of dollars to play with may have many options at their fingertips and benefit from a varied investment portfolio, those with more modest means (this includes almost all investors) will need to be specific and attentive to the promising options they select.
That being said, it’s also important to not silo yourself into smaller and smaller fields, so that the investments you make become “little investment” opportunities. We might liken this to travel, where someone could easily only travel within their own country and could have a wonderful time doing so, but would absolutely benefit from heading to other countries to experience new and enriching cultures all the same.
In this post, we’ll discuss how to avoid that little investor syndrome as you try to make good on your opportunities.
Open Up International Investment Profiles & eCommerce Accounts
The global economy is more interconnected than ever, which means markets abroad can offer exciting prospects to those willing to try. For example, setting up an international eCommerce account or engaging with foreign stock exchanges can help you understand and gain experience in sectors or areas you might not have considered before. The good thing is, this doesn’t necessarily require excessive amounts of capital to get started. That’s because even if you can only take smaller positions at first, exposing yourself to different economies can help you spread your risk. Just remember that:
Understand Investment Law & Restrictions
Different countries have their own regulations concerning foreign investors, and you don’t want to fall foul of any compliance issues or limit your investment potential in the future. Many investors get caught out by things like differing tax regimes or complex trade agreements, especially in the EU, that might complicate their returns. If you’re not certain of how your investment is abiding by regulations, it’s best not to risk your money on them. It’s worth consulting professionals or financial experts with an understanding of a legal framework, who can provide insights into the ins and outs of these restrictions. Our website often has such posts.
Consider Market Trends & Cultures
It’s important to remember that copying and pasting your investment approach isn’t always the best way to work. For instance, trends in technology or consumer behavior might be significantly different from what you’re familiar with. Think about how sometimes, Chinese businesses even invest in the US stock market through reverse mergers, but some of those businesses weren’t as robust as they had indicated.
So it’s important to catch those issues out and take nothing at face value in foreign markets, and let’s be honest, part of the fun of being an investor is learning about what pitfalls to avoid. Just keep in mind that every economy operates within its own cultural and societal parameters. What works in one country may not necessarily work in another, and that includes your potential return or tax on investments.
With this advice, we hope you can continue to avoid little investor syndrome, but still only operate outside your comfort zone where most applicable.
