Welcome to my Paragon Theory, a Gateway to a New World of Personal & Financial Freedom.
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The 7 Steps to Freedom Step 5: Take Advantage of Global Opportunities by Investing Offshore
Wide diversification is only required when investors do not understand what they are doing.Warren Buffett
One of the greatest fallacies is to believe that the best investments can only be found “at home”. The fact is that most of the growth is occurring in the emerging markets, and hence some of the best opportunities are likely to be found in Asia.
In many ways, investing offshore involves the same paradigm shift in thinking that’s required for banking offshore - a willingness to step outside your habitual comfort zone and peer into the whole wide world. It also offers opportunities to build your wealth faster.
But the most important thing to consider, when investing anywhere, is the nature of the investments and the potential for profit. It’s not enough to simply jump in to a rising stockmarket, hoping for the best, because at many times the stockmarket is little more than a casino where investor psychology is the main factor - both negative and positive. And while it’s tempting to climb on an apparently successful “bandwagon”, the current global economic environment suggests caution.
Why? Because ever since the mortgage-backed securities debacle and the prime-pumping of economies by governments of all countries, there is the real potential for more “bubbles” and the inevitable collapse that follows. And nowhere is that truer than for the stockmarket.
An important factor in any offshore investing strategy is to determine your own level of risk-tolerance - whether you’re looking for modest but relatively safe returns, or whether you’re prepared to go after more aggressive profits with perhaps higher risk.
Some categories of investment are of obvious interest in the current environment - including energy, commodities (which include gold and silver), global food producers and specialist high-tech companies. The trick is to know which companies and which opportunities.
When it comes to investing in stocks, you basically have two options - to seek profit in the share price itself, via an active trading strategy, or to seek long-term returns via dividend yield and solid companies. The latter is similar to investing in property, where you hold such properties for the long term - generating income via rental returns. Both property investing and value share investing offer good opportunities at present. And when you factor in the access to such in international arena, there is plenty to choose from.
One of the things to be wary of on the internet is the apparent “easy money” to be had in the forex market. Over the last few years a number of such investing vehicles have popped up - offering tempting potential monthly returns. However, I should warn that unless you truly know what you are doing, it’s much easier to lose money than make it. And even if you do have a good run, all can be lost again in a single day.
The other issue to be concerned about is scams - both obvious and hidden. By “obvious” I mean the various “advance fee” scams that abound - which invariably involve you paying money first without seeing the promised returns. These should be clearly indentifiable to any astute person of course. However, never a days goes by without my receiving such offers via my own email box, and one can only assume that such scamsters are still having easy pickings among naive people.
What is more worrisome is the prevalence of apparently legitimate investments which are in fact no more than ponzi schemes in disguise. I’m sure you know what a ponzi is, but just in case, it’s when an “investment” is offered where the returns are actually the funds brought in by new investors. In other words, there is no investment at all, rather the paying out to earlier investors with money got from later investors. In the end all ponzi schemes collapse - include long-running ones like the social security scams perpetrated by various governments around the world.
A typical example of a ponzi disguised as a legitimate investment would be say a forex trading opportunity - where you are invited to invest funds into a pooled account. The warning signs on these types of schemes include the ability to invest very small amounts, often as little as $20; the use of e-currency payment systems for funding (rather than using normal bank wires); the very high fixed returns being offered; and a generous referral system in place.
Provided you remain clear-headed, have access to reliable information, and have your own well-thought-out investment goals, then investing offshore offers many exceptional opportunities - and you should certainly be making an effort to discover what and where they are.
