- Personal Finance
How to Successfully Invest in Foreign Markets
Understanding the Foreign in the Markets
"I have a well diversified portfolio in foreign and emerging markets!" Doesn't it sound glamorous? There is something about human beings that we like to try and impress other people, but really don't you just want to make money?
The reality is, the average investor does not have the time to truly keep pace with the American market much less all of the other markets of the world. But there is a simplistic method of capturing the diversity and opportunities of foreign markets in a safe and methodical method which I will share with you in this HUB. If you utilize this strategy you can impress your friends while taking advantage of foreign markets without having to keep up with what Putin or other world figures are doing.
Having a portfolio that is not limited to what is going on in the United States makes sense. Be able to stay on top of everything does not. In the paragraphs that follow I will show you how to benefit from these foreign markets without assuming the risk of being a foreign investor.
A Name You Can Trust
What I am about to tell you may shock you and you may also think that my strategy is too simplistic. But safety should be our number one focus. The best way to make money is to not lose money. Therefore, instead of finding a hot company in some third world country where the whole country may be under a different government tomorrow, why not look at Colgate-Palmolive (CL)?
What? You may scream...that's an American company. Exactly, it's a name you can trust, it is an American company, yet 75% of their sales come from outside the United States. That is a lot of foreign profits being made!
Every day millions of people use their products for personal, oral, and household cares. I've personally been in a dozen or so countries around the world. Walk into any market and you will see Colgate in the toothpaste section.
Not only does one benefit from a recession proof business (people are not going to stop buy toothpaste, hygiene, type products), but you have a large company with a strong client base, who makes 3/4 of their sales outside of the United States. Can you get any more diversified then that?
In addition, CL pays (at the time of this writing) a 2.23% dividend per year. Compare that to other safe investment rates. This is diversity you can trust without all the foreign tax reporting issues, unknown companies going out of business, or governments destroying local businesses.
Other Names You Can Trust
Have you ever heard of Coca-Cola? Well, of course you have. I remember the first time I traveled overseas. I was going to Africa and was having to get some shots. The doctor was a personal friend of mine and we sat talking for awhile. He was telling some of the things you need to be careful of while in foreign countries.
One thing he told me was if possible always drink liquids that are bottled by Coke! He told me that their bottling standards, no matter where they are located are the same as here in the States. That has served to be good advise. However, what he didn't tell me is that Coke (KO) has 74% of their sales outside of the United States. They are a great company that has a strong loyalty, great foreign diversification, currently pays a 2.77% dividend, and gives one a very strong foreign presence.
As you can see, it is not difficult to be an investor in foreign markets. All you need to do find strong companies that has strong distribution networks in foreign countries and you can have the best of both worlds: Foreign diversification and safety.
Mc D's is another (MCD) with 65% of sales coming from outside the USA and a 3.77% dividend, buying this foreign master makes a lot of sense. There are other companies too, like Procter and Gamble and 3M. Just find a strong company that has a large percentage of foreign sales and you too can be a foreign investor guru.