No matter where you live in the world or where you’d like to live, it’s possible to make money – and lose it – through investments. For the savvy investor, putting money and time into the global market can be a rewarding scenario. However, in order to start investing internationally, it’s best to understand the basic types of investments that exist.
Overall, lending investments are lower risk than many investments that exist. Because of this, they often have lower, but less volatile returns and losses compared to ownership investments. You’re basically acting as a bank by putting your money into an account where you collect a little bit of interest.
The two most common types of lending investments are savings accounts and bonds. With savings accounts, you’re more or less lending money to the bank and in return they pay you a very, very small interest rate. Savings accounts are incredibly safe since they are usually insured by the bank, but the returns are next to nothing in the grand scheme of investments.
A bond is an umbrella term for all kinds of lending investments. CDs, or certified deposits fall under this category, and are a step up from a savings account since they have a maturity date and slightly higher returns. Treasuries and junk bonds are other examples of bonds.
Ownership investments encompass a much larger and more tangible set of options. You’re basically paying money for an ownership in something that you believe will make you more money in the future. They can be the most profitable types of overseas investments, but they can also be a really quick way to lose your money fast.
Real estate is a good ownership investment because it also fills a basic need: a place to call home. However, if you don’t do your due diligence or get a good price on the property, real estate investing can be a huge headache.
Investing in a business directly can be a good way to get your foot in the door and learn how to do business in another country. Investing in your own business and becoming an entrepreneur is another path you can take, but this requires much, much more than just money. The payoffs can be huge, but so can the expenses.
Stocks are another way to ‘invest’ in a business, but only on paper. Countries all over the world have their own stock market which valuates and trades ownership investment certificates accordingly. It’s easy to get started as there are hundreds of online platforms available to follow, buy, and sell stocks.
Trading currencies on the FOREX market is a similar strategy, but instead of companies, you’re using different country’s currencies. Precious metals and other commodities like oil can also be followed and traded using these online platforms.