With a struggling national economy, more than ever investors are looking across the globe for places to invest. Foreign indexes and markets offer the allure of higher rates of return than can likely be obtained domestically. However, it is important to note the risks associated with investing in world economies compared to the risk associated with investing in the United States. This article will be an examination of some of the international markets that may offer the best opportunities and offer some recommendations on the best way to play those markets. Please note: This will not include specific stock or fund tips, as by the time you read this article, the situations that made those tips enticing may have already played out and/or changed.

Emerging markets offer the greatest possibility of returns. This makes intuitive sense. Markets that have yet to realize themselves have the greatest opportunities for gains. These would be represented by markets in Eastern Europe, South/Southeast Asia, South America, and Africa. Each of these areas is getting a better feel for its local resources and how they can leverage them into market share. Every year, multiple third world nations are moving up the food chain and investors are profiting along the way. However, it should be noted that these areas are also extremely risky. There are numerous factors that can bring the local economies down in a hurry – be they associated with market, politics, population, etc. I would especially recommend against direct investment in many African nations. The political turmoil in many countries (especially in the Western, Northern, and Eastern regions) is just too high to have any confidence of realizing whatever returns you may be hoping for.

That is not to say that emerging markets are the only places worth of your money. Markets like China, India, Brazil, and even Germany have exploded over the past ten years, and still appear to have plenty of growth left in them. There is also a stability factor with the local governments and economies that makes them a safer bet (however, I would avoid Germany until the Eurozone crisis is settled). Here, you are going to be more interested in the specific industries that are having success within these nations and how you feel about the future world demand for these products/services.

With all of this being stated, how would I recommend playing these markets? Believe it or not, I recommend staying in the US. I know, that seems counterintuitive in an article based upon world economies. But, when a world market bursts, there is always a stock on the New York or NASDAQ stock exchanges that will be there to benefit. And the domestic risk is significantly less. The best way to realize gains while still protecting and diversifying your own investments is to play the stocks that will benefit from the initial benefit. In the modern global economy, international trade is so rampant and important that there is always a local beneficiary of a far off event. Do your homework and find them.

Author recommendations:
Business Week – Indian Investment Story
Apex Analytix – For a Secondary Audit
Information from the SEC on investing abroad

Author Recommendations:
http://www.businessweek.com/news/2012-02-23/foreign-investors-buy-net-9-67-billion-rupees-of-indian-stocks.html
http://www.apexanalytix.com/secondary-audit.aspx
http://www.sec.gov/pdf/ininvest.pdf

Author Bio: Author recommendations:
Business Week – Indian Investment Story
Apex Analytix – For a Secondary Audit
Information from the SEC on investing abroad

Category: Finances
Keywords: Investing, banks, China, Europe, India