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

---

Protecting the Tax Advantage of Your Deferred Compensation

The American Jobs Creation Act of 2004 imposed strict new... Read More

Risk and Reward

If you are doing your own investing in the stock... Read More

Is Offshore Banking for You?

You've probably heard about people who keep their money offshore.... Read More

Beginning Investor - Investment Terms

Over the course of the past two months, readers have... Read More

Art Investing for a Financial Future

When we think of investing we probably conjure images in... 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

Bankers in Denial

Denial is a ubiquitous psychological defense mechanism. It involves the... Read More

Why You Need To Buy and Sell Gold Coins (Part 3)

Putting Rare Coin Market Cycles to Work for You...Until recently... Read More

Investing & Online Stock & Share Trading: Money & Risk Management - Atkinson Portfolio Planner (1)

This article was originally featured in Daryl Guppy's 'Tutorials in... Read More

Stock Market Retirement Investment Plan

For a successful retirement investment plan to work in the... Read More

Finding False Gold in Penny Stock

As far as traders go, many do not see the... Read More

Part II of Day Traders and Swing Traders and Options? Maybe!

Before every protective put trade it is possible to calculate... Read More

Seecrets on Investment: Tired of Making Huge Losses in the Stock Market ? Part 1

Over 80% of all individual investors lose money in any... Read More

Bad News - Why The Financial News Media Can Cost You Money!

The communication innovations we have around us today like the... Read More

Should You Put Your Annuity in an IRA?

Let me start by answering that question...if an annuity fits... Read More

Can Your Annuity Do This?

Okay, so I can tell you I have sat in... Read More

How To Find An Investment Advisor

Do you think you need an Investment Advisor? Hold on... Read More

The Perfect Economy?

The U.S. economic data reported this week showed strong output... Read More

Almost Anyone Can Open A Roth IRA!

The Roth is kind of weird until you get used... Read More

The Perfect Mutual Fund

The Perfect Mutual Fund is the one you build yourself!The... Read More

Success Trading for New Traders: What Does Bid and Ask Mean?

Do you ever wonder exactly what's going on in the... Read More

Dont Catch a Falling Knife

One of the most common mistakes made by inexperienced investors... Read More

When It Comes To Investing, Asking The Right Questions Can Help You Make The Right Decisions

Are you ready to open your pathway to financial independence?Well... Read More

Brain Snappers and Other Wall Street Nonsense

The last time you spoke with your broker did he... Read More

New U.S. Mint Coins a Golden Opportunity

In April, the U.S. Mint revealed plans to strike in... Read More

It?s Not the Size of Your Bank Account

You might think that if you win the lottery or... Read More

What Age Should I Start Saving For Retirement?

Ask this question to 100 people and you will receive... Read More

The Power of Small Numbers: Trading Success is Based on Consistency, Not Home Runs

Online trading is so seductive - just sit, click, and... Read More

Trading Is Not Rocket Science!

Despite what some people may lead you to believe; day... Read More

Why the Rich Keep Getting Richer

Rich people: fortunate, lucky, selfish, and arrogant? Or highly educated,... Read More

Delist My Corporation Please

It use to be said that once a company was... Read More

Gold; What Type of Gold to Buy

JewelryThe advantages are:? Gold Jewelry is the easiest of the... Read More

Rolling your 401k: Contributory IRA vs. Rollover IRA

In an ideal world you would start your working career... Read More