Is It Worth The Effort To Invest Into Overseas Investment Products?

22 July 2024

How to invest equity internationally | Sunway Money




Investing in overseas investment products allows Malaysian investors to diversify their portfolios, access global markets, and potentially earn higher returns. Investing in overseas investment products can be a strategic move to diversify your portfolio and tap into growth opportunities not available in your domestic market. Here are some common types of overseas investment products:

1. Stocks and Equities

  • Individual Stocks: Purchase shares of foreign companies listed on international stock exchanges.
  • Exchange-Traded Funds (ETFs): Invest in ETFs that track foreign stock indices or specific sectors.

2. Mutual Funds

  • International Mutual Funds: These funds invest in a diversified portfolio of international stocks or bonds.
  • Global Mutual Funds: These funds include both domestic and international investments.

3. Bonds

  • Foreign Government Bonds: Invest in bonds issued by foreign governments.
  • Corporate Bonds: Purchase bonds issued by foreign corporations.

4. Real Estate

  • Direct Real Estate Investment: Buy property in foreign countries.
  • Real Estate Investment Trusts (REITs): Invest in REITs that own and operate income-producing real estate abroad.

5. Foreign Currency Deposits

  • Foreign Currency Savings Accounts: Open savings accounts in foreign currencies to benefit from interest rates and currency appreciation.

6. Crowdfunding and Peer-to-Peer Lending

  • Crowdfunding Platforms: Participate in equity crowdfunding for international startups.
  • Peer-to-Peer Lending: Lend money to individuals or businesses in other countries through P2P platforms.


Benefits Of Investing Overseas?


1. Diversification

  • Risk Mitigation: By spreading investments across different geographic regions, you can reduce the impact of country-specific risks on your overall portfolio.
  • Sector Exposure: Some sectors may be more robust or available in foreign markets (e.g., technology in the US, luxury goods in Europe).

2. Growth Opportunities

  • Emerging Markets: Countries with rapidly growing economies can offer high growth potential.
  • Developed Markets: Established markets may provide stability and consistent returns.

3. Currency Diversification

  • Currency Gains: Investing in foreign currencies can lead to additional returns if the currency appreciates against your home currency.
  • Inflation Hedge: It can serve as a hedge against inflation in your home country.


Challenges And Risks?


1. Currency Risk

  • Exchange Rate Fluctuations: Changes in currency values can affect the returns on your investments.
  • Hedging Costs: Mitigating currency risk through hedging can be complex and costly.

2. Political and Economic Risks

  • Regulatory Changes: Different regulatory environments can impact on the performance of your investments.
  • Political Instability: Political events or instability in a foreign country can affect your investments.

3. Tax Implications

  • Double Taxation: Be aware of potential double taxation, where you might be taxed in both the foreign country and your home country.
  • Complex Tax Reporting: Managing and reporting foreign investments can be complicated.

4. Market Familiarity

  • Knowledge Gap: Lack of familiarity with foreign markets can make it difficult to make informed investment decisions.
  • Research and Due Diligence: Requires more extensive research and due diligence.

5. Access and Liquidity

  • Market Access: Some foreign investments might have restricted access or require higher minimum investments.
  • Liquidity: Foreign markets might have different liquidity levels, affecting your ability to buy or sell investments quickly.


Is It Worth The Effort?

Whether or not it is worth the effort to invest in overseas investment products depends on several factors:

  • Investment Goals: Align your overseas investments with your long-term financial goals and risk tolerance.
  • Risk Appetite: Assess your comfort level with the additional risks associated with international investments.
  • Market Knowledge: Consider your ability to research and understand foreign markets.
  • Professional Advice: Seek advice from financial advisors who specialize in international investments to navigate complexities and optimize your strategy.


Maximize Your Returns: Streamline Your Investment with Sunway Money

Investing overseas offers Malaysians numerous benefits, including diversification, exposure to growth markets, currency hedging, and access to leading global companies. By conducting thorough research, understanding the costs involved, risks, regulatory environment and seeking professional advice, Malaysian investors can successfully navigate the complexities of international markets and enhance their investment portfolios.

When you invest overseas through an overseas banking account or brokerage account in a foreign currency, it's crucial to consider the costs and efficiency of cross-border payments and currency conversions. International Money Transfer Operators, such as Sunway Money, ensure that funding your overseas account helps keep costs down and provides a better exchange rate compared to traditional banks. Check out our competitive rates for sending money to key markets such as the US, UK, and China, making your international investments more cost-effective.