To make a successful overseas investment, you will need to give time and attention to these important considerations.
Work Out Tax Liability
Truffle producing trees are a tax free investment. So too are some other forms of forestry and green investments. These incentives are helping to make sustainable investments even more attractive to careful investors.
But these types of investment are the exception. Unless the overseas investment specifically mentions a tax exemption, you should expect to pay tax. U.S. citizens, for example, have to pay tax on all foreign income. For investors from the U.S. who take their profits in an overseas bank account, this means paying tax home and abroad.
Check Exchange Rates
If your overseas investment requires using another currency, be sure to give consideration to the exchange rate.
If you are planning to transfer your profits back into your native currency, a change in exchange rates could devastate your profit margin. Of course this works both ways, if you invest in a country with a strengthening currency, your profits will be considerably higher.
This is why currencies like the Euro, Dollar and Pound are popular for overseas investments. There is less volatility to deal with.
Of course exchange rates aren’t important if you’re not planning to transfer your money back home.
Setup A Local Bank Account
Making an overseas investment can also be a lifestyle choice. Let’s say you want to spend half the year living in the South of France. You can make an investment in France and open up a French bank account.
That way, when you arrive in France, you have a bank account waiting for you, containing your investment profits. This is a convenient and practical way to live overseas. If you’re thinking of buying a house overseas, the overseas investment can be used to cover bills or mortgage payments while you’re out of the country.
Making an overseas investment as part of a diversified lifestyle is a great way to combine lasting wealth with a new chapter in your life.
Consider The Countries Future Prospects
There are a few things to take into account when it comes to a potential investment country’s future prospects. One is the political situation. How are the country’s relations with your current country? You don’t want to make an investment only for the country to be placed under sanctions.
The political situation within the country you’re planning to invest in is also important. A stable political climate is vital to a robust economy. Unstable countries carry risks of coups or even wars. In short, the country you invest in should be as stable and secure as the investment itself.
Ask How This Investment Will Diversify Your Portfolio?
One of the biggest benefits of investing overseas is diversifying your portfolio. Most people consider themselves diversified by splitting their portfolio into stocks, real estate, precious metals and maybe cryptocurrencies.
In fact, they are not as diversified as they would like to believe. All these assets are linked very closely to the health of the U.S. economy. A crash in the U.S. economy will drag down their whole portfolio.
Investing overseas, for example truffle producing trees or forestry, gives you an added layer of security. These investments are completely independent of the U.S. economy and are the surest way to diversify.
However, any investment overseas will provide your portfolio with an added level of security against a crash in the U.S. market.
Check Your Moral Compass
A good investment doesn’t have to come at the expense of your conscience. Investing in an exploitative company might make you money in the short term, but at what cost? Do you really want to get rich on the back of other people suffering?
Long-term, people and companies who follow dubious business methods tend to fail. Scammers might make a quick buck, but sooner or later it all turns to dust. If you don’t want your investment to go the same way, steer clear of unethical companies.
Research The Overseas Investment
Researching potential investments is always important, but when you’re investing in an overseas market, it’s vital. Regulations in some overseas countries can be lax to the point of being non-existent. This can leave you with little to no chance of getting your money back if you invest in a shady company.
There are a few red flags you should look out for when investing in companies overseas. One is a lack of testimonials. If you can’t find any success stories, there probably aren’t any. Of course, it could be a new company, but do you really want to be the first in the water?
This is also true for real estate investments overseas. Investing pre-construction can be lucrative, but it’s also risky. A lot of research is needed. You will want to check some previous properties built by the construction company and see how they’re holding up. If possible, speak with some residents and get their honest opinions on the state of things.
Do You Need An Exit Plan?
If an unexpected emergency finds you needing to cash out, how easy will it be to get your money?
If you’ve invested in luxury real estate in a third world country, you might be forced to sell at a major discount if you need to make a sharp exit. On the other hand, if you’ve bought real estate in Europe, chances are you will be able to sell fairly quickly at market value. You can gauge market liquidity by regularly checking the local real estate market. If properties are staying unsold for a long time, liquidity is low.
Be Extra Vigilant When Investing In Third World Countries
As we mentioned above, investments in Third World countries require extra vigilance. The chance of falling victim to scam companies or fraudulent offers are higher in these areas. Do your research and check everything out in person.
That being said, there are good investments available as well. There are other benefits, too. If you can find the right investment, you have a great opportunity to positively impact people’s lives in less fortunate countries. Bringing new money and enriching the local population is capitalism at its best.
If you’re lucky enough to invest in a country on the brink of rapid economic development, you can make substantial profits.
Just be sure to research everything thoroughly. If you still have reservations at the end of the research process, you might be better off walking away.
Investing overseas is the only way to truly diversify your portfolio. A real estate or forestry investment is a proven and low-risk way to do this. We believe that truffle producing trees are the best forestry investment available today. Returns can be as high as 1470% over a 30 year period and the minimum investment is way below similar forestry investments. More info including can be found on our invest page.
Investing in third world countries comes with significantly greater risk, but there are some moral and financial rewards that make it an interesting choice.