With great risk comes great reward, and vice versa. If you’ve been planning to invest in an international spectrum, you have the possibility to experience the marketing trends and cultures of different countries, different from your own.
But, does investing in a foreign land provide you opportunities to expand your return on investment? What risks can you have or what rewards will you be a part of in the future?
Portfolio Fortification
When you expand your business to the international arena, you develop a global portfolio. You’ll get to learn about the emerging marketing trends, learn about the entrepreneurial spirit in different countries, and the technological innovation associated with those. You’ll also be able to find certain investors willing to partner up with you so that you don’t run the risk of losing out on your business, just because of the cultural and language barriers associated with it.
Portfolio Diversification
When you start investing in foreign lands, your portfolio as an investor gets diversified in both foreign and domestic investments. This also reduces the risks by spreading out your business in a wider geographic area in different economies and markets.
Personal Interest
Most investors make investments in a foreign land because of their emotional, familial or religious attachments with another country. They not only want to expand their business to a different country to increase their profit and generate revenues, but to help the economy of other countries, work with startups and generate greater employment opportunities for them.
"... diversifying internationally is one way for investors to avoid effectively ‘betting’ solely on the U.S." -- Gregg Fisher, founder, president and CIO of investment management and advisory firm, Gerstein Fisher.
Another personal interest associated with investing on a foreign land is to get a citizenship by investment. You can take advantage of your business, run it for a certain period of years and be a part of the country you make investments in.
The Risks
When you invest in a land you don’t have much idea about, your risk of losing out on the business is increased. You need to evaluate the difficulties associated with doing business elsewhere while also seeking for foreign opportunities.
Political, Economic And Cultural Events
When you invest internationally, your capital gets exposed to a different political and economic system. Those markets can be unpredictable at different times and may change drastically. This might hamper your operation and you might need to rely on “timing” markets only.
Similarly, the cultural forces associated with investments in foreign lands can impact the market dramatically.
Legal Issues
As a part of a foreign company, you might not get different legal cases resolved as neatly as the ones the domestic company could have been a part of. The legal entanglement between you and a foreign law might not be similar to that of the domestic investors and you might have a significantly lower chance of winning a lawsuit. Similarly, the jurisdiction issues are believed to favor the domestic clients in most cases and there are chances you might not even collect any settlements.