3 Tips to Double Your Portfolio in 2022May 10, 2021
Is your investing journey limited to your home country? Would you be keen to invest in other markets that are doing well?
As COVID-19 continues to rage on, you will most probably be unable to travel for some time.
Instead of globetrotting, have you ever thought of letting your portfolio ‘travel’ the globe on your behalf?
Here are three reasons why you should consider growing your portfolio through overseas investments.
Reason 1: Global Opportunities
Figure 1: Adapted from Interbrand, Best Global Brands 2020
Wall Street legend Peter Lynch has a very basic investment tenet, “Buy what you understand.”
Mr Lynch believes that individual investors have an advantage over Wall Street as they have the benefit of first-hand observations.
While you are cooped up at home, have a look around you. Observe the appliances and products that you use every day. If something attracts you as a consumer, why can’t it pique your interest as an investor?
Fun fact: Many of Mr Lynch’s investment ideas came to him when he was walking through the grocery store or chatting with friends and family.
Take for example an electronic device which many of us cannot live without: the smartphone. Many of us depend on our iPhone (AAPL-US) or XiaoMi (1810-HK) to surf Facebook (FB-US) for news and updates.
When we crave entertainment, we use our smartphones to catch up on the latest k-dramas and blockbusters through Netflix (NFLX-US) and Disney+ (DIS-US).
During the lockdown, many of us passed time by playing video games on Tencent Holdings (0700-HK).
While working from home, we could be using computers from Lenovo (0992-HK) and Hewlett Packard (HPE-US). The majority of us also had to buy things online on Shopee (SE-US), Lazada (BABA-US) or Amazon (AMZN-US). To make electronic payments, we use Visa (V-US) or MasterCard (MA-US).
Whether we realise it or not, we are constantly interacting with these foreign listed companies through their products and services on a daily basis!
Investing opportunities present themselves when these businesses extend their reach, market share and profitability.
Reason 2: Geographical Diversification
Diversification is part and parcel of risk management in investing.
Another Investment 101 tenet is, do not put all your eggs in one basket. If you invest in stocks just in one market, any price shocks in that market could wipe out your portfolio.
Diversification helps to reduce your risk by spreading your money over a variety of assets. You can diversify by type of asset, sector and geographical region.
Recall the massive civil protests in Hong Kong in 2019 which pummelled consumer spending and investor sentiment. Businesses lost money and many had to close down. As a result, Hong Kong shares came under heavy selling pressure. If you were a pure Hong Kong investor in those days, you could have lost a tidy sum of money.
Trading different markets could reduce your reliance on a single market for returns. With access to over 20 markets – including Singapore, the US and Hong Kong, POEMS offers a good selection of global markets for you to trade in!
Reason 3: Market Liquidity
Market liquidity is crucial in trading.
A liquid investment implies there is sufficient trading interest in the market to allow you to buy and sell your assets quickly and easily.
A liquid market is generally associated with less risk as there is usually someone willing to take your opposite position.
This means you can find a buyer to offload your assets without having to cut your price too much or buy assets without the need to pay too high a premium.
Here are some of the largest and most liquid stock exchanges in the world
- New York Stock Exchange, United States
- NASDAQ, United States
- Tokyo Stock Exchange, Japan
- Hong Kong Stock Exchange, Hong Kong
Given that foreign markets have different operating hours, there are always trading opportunities round the clock!
At POEMS, we offer free live prices for the Singapore, Japan, Malaysia and US stock markets. This means you can trade with confidence with our 24/5 trading support!
Explore an array of financial products across multiple global exchanges at brokerage fees as low as USD$1.88 flat when you open a Cash Plus Account with us today.
Trade with confidence on POEMS’ award-winning suite of trading platforms, with a trusted broker that is regulated by the Monetary Authority of Singapore (MAS). We are present in 15 countries, including Indonesia, Malaysia, Singapore and the US.
Complete with real-time streaming charts, powerful technical indicators and fully customisable chart tools, the POEMS platform is suitable for anyone looking to navigate markets and monitor real-time price movements.
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Phillip Securities Pte Ltd (a member of PhillipCapital) has over 45 years of trading heritage and is regulated by the Monetary Authority of Singapore (MAS).
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About the author
Mike is a member of the largest dealing team that specialises in equities, ETFs, CFDs and bonds in Phillip Securities, managing 50,000 client accounts. He believes in investing long term for passive income and evaluates stocks using fundamentals. He is currently the Chief Editor of the HQ Education Series that aims to equip clients with the tools and skill sets to make better-informed investing and trading decisions.