You would have by now come across situations or people who told you that you could invest your money in foreign money markets. Perhaps you have been putting your money in Malaysian stocks and find them not exciting anymore.
Not only for the rich
It is a myth to say that investing overseas is only for the rich. Did you know that you can put your money in foreign markets without needing high capital? This is actually an affordable option and if you manage your funds right, it can be very profitable too. The rule of thumb though is that you are not in for a hit-and-run model. This could in fact be the perfect option for the long term and works well for your retirement too!
The attraction of investing overseas
You might ask why would you invest in markets that you are not familiar with. But then again, in the local market which you feel you are familiar with, it might burn you too! So why not consider diversifying your money in other markets and then spread the risk at the same time?
- More options, more opportunities – When you limit yourself to the local market, you are subjected to the performance internally. Political and other issues have dampened the growth in Malaysia over the last 10 years where the FBM KLCI grew less than 30% between 2010 and 2019. Other markets grow faster and are more stable. If you buy stocks from the US, they would have outgrown by now.
- Markets galore – You know for a fact that the USA, Europe and more notably China are economic powerhouses. Imagine holding their stocks 10 years ago. Make no mistake about it, the reason why EPF and ASB have been so profitable was due to their investments overseas.
- Value of local currency – Any investor will tell you that if you have all your investments in Ringgit, it could become below the market value against the US Dollar. With overseas investments, you are more protected against the depreciation of the Ringgit.
How do you start?
Generally, overseas markets are more open as compared to the Malaysian counterparts. You can actually directly buy stocks that are listed in their respective economies. Get connected to a local broker who is connected to the international money markets. But this is costly at times because the fees are calculated in US Dollars. You would also be required to have high start-up capital mainly because of the foreign exchange rate.
Another way for you to do this is through a local unit trust manager. Most unit trusts today will cover some form of overseas markets because they want to diversify their investments for better stability and returns. EPF recently launched its i-Invest where you can put your money in the EPF into these overseas markets. This is possible from as low as RM1,000 channeled through your Account 1 of your EPF amount. From there, you get to choose where you want to invest and allocate the amount accordingly.