Internet access has decentralized everything, with investment opportunities no longer limited by geography. Such access has made it easier for investors to expand their offshore portfolios in ways that were unimaginable in the past. Offshore investing allows savvy investors to diversify their risk across the globe and get exposure to the growth of developed, developing, and emerging economy. For example, you can start a non-resident company in the Cayman Islands with the help of local agents from Bridgewest Cayman Islands. Considering offshore investments are an excellent addition to your portfolio, here are the best ways to leverage these investment opportunities.
Real Estate
Numerous countries that want to attract investors have lucrative real estate deals. Take countries like Malta that give you residency in exchange for you investing in their real estate. The best thing about these markets is that they are growing since they are popular tourist hubs.
Additionally, some have deals with banks to provide financing for those interested in making foreign investments on their soil. The opportunities range from residential properties that you can rent out to locals and tourists, a common model being short-term rentals through Airbnb and commercial property.
You can use the rental income to cover the cost of purchasing the property, management, and maintenance, after which you can use the property however you wish.
Investing in Foreign Stocks
Offshore stocks are an option any investor should be thinking about. Granted, some stocks are only traded on domestic exchanges, but some are traded on international exchanges. These stocks allow you to invest in opportunities that would otherwise not be available in your domestic market.
A crucial factor to consider is that you must use a brokerage that gives you access to these stocks, but not all do. If you find one that does, you would have to buy shares in US dollars or another internationally-recognized currency.
This approach has several benefits, such as finding investments with a high rate of return by lower risk levels and feeds. However, you will have to understand the laws and regulations that govern the markets you are interested in, something that a reputable broker could help you with.
You can also get exposure to foreign stocks by trading options. Stock options give you the right, but not the obligation to buy or sell options contracts. You can check out James Cordier’s complete guide to option selling to learn how to leverage options and what doing so entails to get the most out of using them as an investment alternative.
Mutual Funds
Another excellent option is mutual funds if you are understandably worried about the risks inherent in offshore stock investments. Offshore mutual funds are functionally similar to domestic mutual funds as they let you invest in numerous stocks through a single purchase.
They also pool money from everyone who has bought into them so that you can collectively hold a sizable position in the market. Doing so can potentially increase your returns and minimize your risks.
The exposure you get with offshore mutual funds is similar to what you get with domestic mutual funds, the primary difference being that you will be exposed to foreign assets and securities.
International Bonds
Many countries, especially developing countries, allow foreign investors to buy bonds that allow them to find different projects. The returns are structured as regular payments based on the agreed-upon interest rate plus the principal amount at maturity.
International bonds, just like their domestic counterparts, are one of the safest investments because they are guaranteed and are not usually affected by price volatility. The lower risk and volatility also mean that bonds can have lower returns than other investments.
However, these characteristics make them an excellent option for conservative investors.
Investing in Precious Markets
Investors can buy and sell or speculate on the price of precious metals. They can also invest in stocks of mining companies. There are numerous precious metal options for investors to choose from, including gold, silver, copper, platinum, and palladium.
Precious metals have two main advantages that should persuade you to invest in them. One is that they tend to increase in value over time, and their price trends upwards despite fluctuating over time. Second, precious metals are incredible hedges against inflation and market downturns as they tend to hold or increase in value when other assets struggle.
For these reasons, precious metals can help stabilize your offshore investment portfolio when other assets and investment options are underperforming.
Offshore investing allows you to diversify your portfolio in new ways, spread your risk globally, and gain exposure to new markets and sectors. Understanding the geopolitical and economic conditions of the countries you wish to invest in is crucial to ensuring the best returns on investment. Working with a strategist and financial advisor can also help you leverage such investment opportunities.