There is no question that every investor should not sit on a single investment portfolio. To make the most out of your portfolios, you will want to make them diverse. In other words, you do not buy a single large-cap stock. Instead, you make your portfolios multifarious to keep the cash flow going.
To put things into perspective, you can not always rely on domestic funds and stocks. Maybe stocks in your country are not as rewarding as the global market. That is why you reckon that you must go for global investment portfolios. This means that you do not rely on domestic funds and stocks that are trading in your country. Instead, you go beyond borders and buy international stocks.
In this article, we will share a beginner guide to global investment portfolios. Let’s get started with the very basic one:
What are Global Investment Portfolios?
Essentially, global investment portfolios are international stocks that focus on the international market - instead of domestic markets.
So, if you have the right mindset and required expertise, investing in global investment portfolios can expose you to new opportunities.
What are the Best Practices of Global Investment Portfolios?
Since global investment portfolios are entirely different than domestic funds and stocks, investors need to be extra cautious about their portfolios. There are numerous complications that can take place in global investment portfolios compared to domestic investments. The first and foremost one is the difference in currency.
For instance, if you are making a foreign investment from India, you will be using the domestic currency. In turn, it will be exchanged for USD. At this point, the value of the currency where you are trading will play a massive role.
Therefore, you need to be mindful of the currency you are making foreign investments in. Another crucial part that you should be mindful of is the industry trend. Just like domestic funds and stocks, global portfolios also go through ebbs and flows. That is why you will want to keep up with the industry trends to avoid any portfolio shocks.
Regulations and Options of Global Investment Portfolios For Investors
If you want to excel in your investment journey through Global Investment Portfolios, you will need to understand that there are certain regulations that you are bound to follow. These ‘terms’ are laid out by the authoritative body called Liberalized Remittance Scheme (LRB.) The first rule that you should comply with is that you can only remit up to $250,000 in your global investment portfolios every year.
Here are the two most common global investment portfolio options that domestic investors can opt for:
- Overseas Direct Investments (ODIs)
- Overseas Portfolio Investments (OPIs)
However, it is advised for every investor to reach out to relevant authorities if the nature of their overseas investments is complex or unlisted. It is also important to tune into the LRB scheme. Because the LRB scheme makes subtle changes to its rules and regulations, investors can find the latest updates by tuning into the governing body of overseas investments.