10 Investments You Should Never Make Based on Emotion
When your home country has exhausted all of its delightful advantages, it’s a good time to consider moving abroad. While transitioning to a new country requires a lot of effort on your side, it can also bring excitement to your life and break the soul-sucking routine that you got so bored of.
While adopting a new lifestyle, you can also take advantage of the unique investment markets that other countries have concentrated on over the years. However, it’s important not to rush into things or make important life decisions based on emotion and impulse. So, let’s look at 10 main investment opportunities that you can enjoy abroad, yet require careful planning, and what aspects you should review before diving in.
1. Real Estate Investments
There are many factors to take into consideration before investing in your new home. Huffington Post narrows these factors down to 12 aspects: climate, cost of living, main spoken languages, entertainment opportunities, environmental conditions, health care system, infrastructure, existing expat community, neighborhood, residency options, safety, and taxes.
Once you ditch the impulse to start your new adventure in the country you randomly pointed to on a map, carefully assess these factors while consulting your personal interests and personal goals at the same time.
The secret trick to a successful relocation lies in the local lifestyle. You should learn more about the habits, traditions, and life opportunities that the town has to offer. For example, if you can’t imagine your life without a good internet connection, some countries might utterly disappoint you. No matter how expensive an internet package might be, some areas just can’t provide the right conditions.
Also be aware of the fact that you should be ready to pay cash for real estate overseas. Most countries don’t provide financing options for expats. However, the prices overseas are often much lower than in your hometown. Countries like the Netherlands, Italy, Greece, and even Japan will have an amazingly lower impact on your real estate investment than the United States.
2. Foreign Exchange Investments
You certainly must restrain from rushing into exchanging your currency. If you start building a bridge between the life you left behind in your country of origin and your new home country, you are bound to become a master of foreign exchange investments.
Juggling between two different markets can bring you great benefits. First off, there is diversity. When one market is up, it tends to dominate all the others. But the economy is constantly fluctuating, so no market gets the crown for too long, and others will take its place. Getting familiar with at least two different currencies will smooth the path to a higher investment return. So, start doing your homework before plunging into Forex.
3. Retirement Investments
It is never too late to manage your retirement plan, and it’s a must when it comes to moving abroad. The sooner you understand how to increase your retirement finances within foreign grounds, the better off you will be. Will you still be qualified for the retirement opportunities that your country of origin offers?
As a U.S. taxpayer, you must be aware of the fact that the Foreign Account Tax Compliance Act might get in your way. While working for a foreign company, you can still pay your tax contribution. However, after working for 5 years abroad, you are no longer qualified to pay these contributions. You are not forced to collect your pension finances, but this sum of money will come to a halt and won’t increase anymore. As a quick solution, you should research how you can invest in pension sources through private companies.
Panama is the most welcoming country in the world for expats. All you need to do is prove that you are receiving a monthly pension of more than $1,000, and you need to certify that you are over 18 years old. Afterwards, you will be in discount heaven: 50% discount for all forms of entertainment, 25% for electricity, 25% for restaurants, even 20% off medical care, and so many other similar benefits.
4. Stock Investments
Investing your finances in stocks might prove to be a little trickier than you think. The 2010 Foreign Account Tax Compliance Act has many restrictions when it comes to taxation and reporting of foreign investments. This limitation affects the stock investors directly, to the extent that many U.S. brokerages refuse to work with expats.
So, you should search for an expat-friendly broker that operates within the U.S. and who specializes in working with relocated Americans. Afterwards, things should get easier for stock investments.
Fidelity is a full-service broker that you can trust wherever you are in the world. They provide their clients with thoroughly researched reports, quality customer care, and their focus is on investment guidance and retirement services. Their trading commission structure depends on accessible flat-fees with the lowest margin rates on the market.
5. Gold and Silver Investments
Gold and silver investment might seem simple at first glance, but in reality it should be based on thoroughly conducted research, as is required by any other kind of market.
However, precious metals are the only universal currencies, and no matter how low their value goes, gold and silver will always have their glorious comebacks. They work best for you when countries go through an economic crisis.
Focus on contemporary bullion coins, and capitalize on the huge advantage that only gold investors enjoy. If you buy gold from abroad as a physical person, you are exempt from reporting your investment to the U.S. government.
6. Small Business Investments
Changing your resident country is a great opportunity to start your own small business. You will bring a strong body of knowledge with you, gifted by your cultural background and professional entourage. This way it is easier to spot the shortcomings of the local community, resolve this with the experience from your country of origin, and target a broad audience for your ideas. Find a successful business strategy in your hometown that your new city lacks, but would greatly benefit from.
Great businesses stand in small details. Make the most of your connection to two different countries and base your business ideas around it. You can offer your services as an intermediary between corporations and their target audience from your country.
However, you should also learn about your new country of residence in order for your business to work. Get accustomed to their habits, daily routines, traditions, and even adopt an active role in the local community.
A new startup in the Arab World is revolutionizing the local community by increasing the youth employment rate, while holding an impressive estimated value of $1.1 billion. It’s an exemplary startup that shows that you can make the world a better place while nurturing a solid business plan.
7. Alternative Investments
Having a foot in two different markets is an opportunity few people have. One way to open a revenue source based on this situation is by providing products that are unique from one country to another.
For example, if you are a person of fine taste, you can invest in art. The world of high-profile art can often present an overly sophisticated and complex market, but contemporary and unknown artists have quality works as well and might not know how to sell them. Start discovering local talents and offer them access to a vast audience that is hard to reach for their competition.
Another good idea would be investing in coins or vintage stamps. Your home country has many nostalgic collectors that would pay a fortune for rare antiquities from far off periods of time, like the 1500s or 1600s.
8. Wine Investments
Food and drink are the two main pillars to creating any lasting relationship. One of the struggles you will face when moving to another country will be creating your own entourage all over again. However, operating in the alimentary industry will make it easier to meet new people.
Wine is one such industry that can provide you with a constant source of revenue. Wine knowledge has become a true educational milestone in one’s ambitions to enter the higher social class of aristocracy. You quickly see the value in this market when you discover that one bottle of Chateau Lafite from 1787 has recently sold for $160,000.
The wine market stats show that wine exports are continuing to bloom in Europe, and the continent is going through its most productive period in the last 20 years. Europe provides 50% of wine consumption worldwide. However, the newer competitors in the wine industry like New Zealand, Chile, Australia, and South Africa are experiencing tremendous growth as well, with an increase of 370% in their volume of exports.
Before you focus on this part of your relocation, you should first build a strong network of connections that are interested in the act of wine drinking. Learn how to create a vintry with perfect conditions for your collection and provide quality services to each of your clients.
9. Angel Investor
The internet has seen a rapid surge in startups in recent years, and it’s getting harder to keep up with the all startup unicorns. Many companies appeared out of nowhere with services that targeted entire countries, and they have managed to sustain their success and monopoly over the years. Such companies include AirBNB, Uber, and Github.
So, becoming an angel investor opens up a profitable source of revenue. You mustn’t get carried away with fancy and complex companies, but instead inspect the market and choose a company whose values resemble yours. And, of course, the same company must also have a strong marketing plan for the next 5 years.
10. Self Investments
You are your most treasured asset, and you should definitely invest in yourself. Moving abroad may be overwhelming. The key is to give yourself time to adapt to your new environment and culture.
Start learning the local language as soon as possible. Most countries nowadays focus their educational efforts towards English, which is becoming the universal standard. However, you will get along much faster with your new community if you speak their language.
Adapt to the new lifestyle. If your new colleagues drop everything during their work breaks and head to the local pool, sticking to your old habits of keeping your work and personal life separated will not do you much good.
Keep investing in your education and lifestyle, and the good results will quickly show up.
In conclusion, any type of investment requires a solid foundation built through education and research. You can’t rely on your gut or emotions to find a safe investment opportunity. Everything is a complicated mathematical equation where risks must be kept to a minimum. Once you solve this equation, you will head to a fulfilled and quality lifestyle wherever you choose to live.
Charles Leworthy is a Denver-based financial analyst and contributing editor at ForexBinary101. He is passionate about economics and, after studying the great works of Adam Smith, John Maynard Keynes, and Milton Friedman, he decided to pursue a career in the field. He is now focused on the capital market, stocks, bonds, and other types of investments.