How to Invest Overseas - Intelligently!

In recent months, many advisors have talked a lot about the wisdom of investing overseas, but most have failed to really address the way to do that. For new investors, investing in the U.S. is challenging enough, but investing across borders is often even more daunting.

Many major issues need to be addressed, but the first step is deciding how to buy and sell. Here are some possibilities:

1. Direct purchase in foreign markets. The most straightforward way to invest in foreign markets is by buying shares directly in the regional or national markets. This approach has some drawbacks, however. First, one must buy through an account with a broker who is registered in that nation. For Canadian shares, this is relatively easy, since many U.S. brokers connect with the Toronto exchange. But going beyond that zone leaves us with few, and expensive, choices. Plus, shares on many foreign exchanges are not subject to the same reporting requirements as those on the NYSE or even the NASDAQ. Thus, we may not know enough about the financial status of many international companies available in this way. Also, since these shares sell in foreign currency, we must calculate all the exchange rates.

2. ADR's. American Depository Receipts are foreign stocks (actually, certificates representing those stocks) selling on American markets. As such, they are required to fulfill all the reporting requirements and laws that U.S. stocks are, and hence are much more transparent. Plus, the shares are priced in U.S. dollars, simplifying the purchase process. ADR's are the most common method for American investors to invest in foreign stocks, and include a number of the names I have recommended in the past, including Unilever, Telefonos de Mexico, America Movil, Korea Electric, Canon, Nokia, and Bancolombia, among others.

3. American multinationals. An even simpler way to play foreign markets is to invest in American companies that do business overseas. Companies like Apple, Coke, and Procter & Gamble do almost as much business around the world as they do here in the U.S.

4. International mutual funds. Mutual funds simplify the process of investing overseas. A buyer can purchase one fund which may hold dozens of different stocks that the fund managers have researched.

5. International Index Funds: Exchange Traded Funds, such as iShares (formerly known as WEBs), are benchmark indices of foreign markets. Buying an index allows one to gain from a wide market rather than trying to research individual stocks.

6. Closed-end Country Funds. Like the index funds above, country funds focus on a particular market. The difference is that these funds are actively managed, and may often be available at a discount to the value of their shares. If one watches carefully, one can occasionally take advantage of great deals in these shares, which trade just like stocks. Some examples are the Swiss Helvetia Fund, the Brazil Fund, or the New Ireland Fund. Closed-end funds may also be available that invest across national borders, such as the Emerging Markets Telecom Fund, the Templeton Dragon Fund, or the Latin American Discovery Fund.

In the end, there are many ways to invest internationally. Use good judgment, but be sure to take advantage of the opportunity to diversify across borders. One thing is for sure: there's no longer any excuse for keeping all your eggs in one (national) basket.

Scott Pearson is an investment advisor, writer, editor, instructor, and business leader. As President and Chief Investment Officer of Value View Financial Corp., he offers investment management services to a wide variety of clients. His own newsletter, Investor's Value View, is distributed worldwide and provides general money tips and investment advice to readers both internationally, and in the U.S.

Scott Pearson can be reached directly at Scott@valueview.net or by visiting www.valueview.net

---

Fundamentals of Option Pricing

When one begins to consider an option, it is very... Read More

Who Wants To Be A Millionaire?

I am sure you have probably read about the power... Read More

How to Invest Overseas - Intelligently!

In recent months, many advisors have talked a lot about... Read More

Top Ten Investment Mistakes

1. Lacking an investment plan a/k/a/ "Don't take a trip... Read More

Hedge Fund 101 - Make Money with Hedge Funds

Investors are always looking for the best investments that will... Read More

The Economys Greatest Depression Downturn Ever Is Now Just A Few Years Away

What really controls the economy? Forget interest rates, forget deficits,... Read More

How to Choose the Right Share Class

You'll want to opt for the no-load or institutional share... Read More

What Is A Fair Market Value, Really? If Youre Going To Trade, Be Sure Its Worth It!

I've been involved in online trading, specifically with stock and... Read More

Stocks, Oil, and Bonds

A barrel of oil bounced to over $60 Thu, which... Read More

Success Trading: More Basic Terminology for New Traders

One important aspect of trading the markets is to understand... Read More

The Arrow-Debreu Contingent Claims Model of Investment

Throughout the discussion of speculation and stability, we emphasized that... Read More

Sitcom Investing

A fickle stock market encourages good-humored mockery.Recently, as I watched... Read More

How Do I Start Investing Online and What Are Some Basic Tips?

If you are new to investing online, don't put your... Read More

Boost Your Income With Financial Spread Betting

About 6 years ago I started to notice that certain... Read More

Find a Methodology and Minimize Investment Madness

There are many reasons to be investing these days, and... Read More

HYIPs Investments or Scams?

High Yield Investment Programs (HYIPs) appear at first to be... Read More

Franchise Investing, Franchise Opportunities and Franchising Renewals

Have you considered buying a franchise instead of trying to... Read More

Looking For a Safe Investment? Try a Certificate of Deposit

If you are looking for a safe investment and you... Read More

Well Managed Investing Risks Bring Rewards!

"Risk comes from not knowing what you're doing!" Warren Buffett... Read More

Use of a Franchise Business as a Family Tax Planning Strategy

Suggesting the use of a franchise business as a vehicle... Read More

Short Selling for Investors

Shorts. Let's see. If there are shorts there must be... Read More

Raising Capital Using a Public Company

Going public in this manner is ideal for companies that... Read More

Lessons in Transition

Q: What have been the most successful approaches to attracting... Read More

Get Wealthy With the Rule of 72

When it comes time to retire how many people would... Read More

July 2005: Hurricane Forecasts for Weather Traders

Tropical Storm Arlene formed as a tropical depression on June... Read More

Why You Need To Buy and Sell Gold Coins (Part 6)

Pre-1933 Gold Outperforms Today's Gold Bullion...Since 1970, an investment strategy... Read More

In a Time of Need

As I take my leisurely walk with my dog through... Read More

Shareholders Meeting Changing With Times

A significant number of corporations that settled accounts in the... Read More

Annuity Help

Many people today are looking for annuity help. The biggest... Read More

Investing In or Owning Drug Lab Properties

Clean Up (includes the insides and the outside of a... Read More

Building The Foundation For Wealth

You wouldn't build your home on anything less than a... Read More

Angel Investors: Who They Are & When Are They Appropriate

Angel investors are individuals who invest in emerging business ventures.... Read More

Investing Online Has Its Rewards: Find Out How To Take Advantage Of Them

Computerized investing. Online investing. Have you taken the next step... Read More