10 Factors To Look Before Investing In Foreign Stock Markets

Factors To Look Before Investing In Foreign Stock Markets. World map indicating various stock markets icons on a desk.

Overseas stock investment is not a big deal. These critical factors to look before investing in foreign stock markets can help you a lot.

Buying shares of foreign companies was once considered as the most daring act of cosmopolitan investors. It is perhaps because you had to tangle with currency conversions, old settlement procedures, incomprehensible annual reports, as well as various rules, regulations and restrictions.

According to a post published in Forbes, most of the financial planning experts have been lecturing to put 20% or 30% of your portfolio abroad.

Today, you can legally invest or trade in almost any stock market in the world. However, there are still a few stock markets in which foreign retail investors are not allowed.

Similarly, there are few markets that allow only the citizens of certain countries to invest. Sometimes, it can be illegal for citizens of one country to invest irrespective to what the local market says about foreign investors.

For example, US laws would prohibit US citizens from investing in Iran, even if you could open an account in Tehran. However, in most of the cases, you can invest wherever you want with certain limitations or restrictions.

Here are 10 factors to look before investing or trading in any overseas or international stock market:

[You can also watch an exciting video on this post from GetUpWise channel on YouTube.]

(1) Mode Of Investment

It is one of the most significant factors to look before investing in foreign stock markets. A person can invest or trade in international stocks by two ways. First mode of stock investment is through local stock broker of your country.

Second mode of stock investment is through foreign based stock broker. These modes of investment are found to have their own advantages & disadvantages.

Generally, local stock brokers are costlier than foreign based stock brokers. For example, local broker may charge around $13 per trade while foreign broker may charge around $2.5 per trade.

Similarly, you may also have to perform currency exchange every time a transaction is made. It is not the case when using foreign stock broker.

On the other hand, you can contact local brokers simply by visiting their offices anytime. However, this is not the case when investing through international stock broker.

Image Source: Shutterstock

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