How Expats Can Avoid Unnecessary Investments

While you are settling in a new country and juggling the demands of your job with a crash course on culture, thoughts of investments can take a back seat.

However, once you have made yourself at home, turn your attention back to your financial portfolio and make sure you start growing your income with some smart expat investments. 

Investing as an expat requires careful consideration and due diligence; your legal obligations and tax compliances will be different and more complicated, and navigating your status as a foreign investor will require some thought.

To avoid unnecessary investments that might lead to financial losses or missed opportunities, follow these essential tips:

1. Clarity In Goal Setting
   

   Don’t jump on the investing bandwagon without understanding where you want to go. Define your financial goals so that you take the straightest route to success. Clear goals will keep you focused and help you avoid investing in products or companies that don’t support your needs.
   

2. Fix Your Risk Tolerance
   

   We all want high returns quickly, but not everyone has the personality and the mindset to handle the stress high-risk manoeuvres bring. Understanding and stating your risk limits will help you disregard trends that don’t fall within your comfort level. 
   

3. Beware of Frauds
   

   You know what they say – if something seems too good to be true, then it probably is. 

   As an expat, you are likely to encounter many locals and salesmen who will try to get you to invest in strange things. There are many ways to catch a high-risk or fraudulent deal. Some obvious red flags you can keep an eye out for are guaranteed high returns, high-pressure sales tactics that push you to invest quickly, and get rich quick schemes promising fast and high returns. 
   
   But not all opportunities are overtly suspicious; some might even seem reasonably genuine. But if you have even a sliver of doubt, we recommend, you consult an expert before investing your money.
   

4. Diversify, but Wisely
   

   Risk mitigation starts with diversification; however, don’t spread your eggs in too many baskets. You might end up juggling them all and gain very little for all the extra effort. Trying too hard to diversify might lead you to invest in unsound companies and financial products.  
   

5. Don’t Skimp on the Research
   

   One of the main causes of bad investments is because people jump the gun and invest in a hurry without taking the time to really understand the details of the stock or financial product.
   
   Always investigate the company or the agency behind the investment opportunity as well as the market conditions and forecasts for that particular industry or sector before you commit. 

   
   Your investigation will throw up a lot of different opinions; we suggest you also consult a professional financial planner to get an expert perspective.
   

6. Avoid Unfamiliar or Complicated Products
   
   Living away from your country, you are bound to come across unknown investment opportunities. Make sure you research them within your local network or ask your financial advisor to get you some inside information.
   
   However, if, despite all this information gathering, you don’t understand the opportunity or the company, then err on the side of caution and give it a pass. 
   

   When it comes to investing, reputation means a lot. Stick to well-known options; you might earn a tad less, but the security they offer will be well worth it.
   

7. Minimise Investment Product fees
   

   Every investment product charges a fee, and in offshore markets, expats investments often have to pay extra on top of these existing fees.
   
   A per cent or two might not sound very high when you get started, but when your pre-fee average return is around 7%, and inflation eats into it, it can reduce your portfolio significantly. 
   

   Don’t overlook the fee while considering investment opportunities and, steer clear of high-fee products altogether.
   

8. No Greed, No Fear
   

   There will always be high-return investments (remember Bitcoin) that take on a mythical Must-Buy aura, often nudging investors to part with their cash with the fear of missing out. 
   

   On the opposite end of the spectrum, a scare of a crash can result in panic selling. Don’t fall for either of these.
   
   Delink your portfolio from greed as well as fear. Focus on long-term results, and ensure you have a strong and diversified portfolio and trust in it. 
   

9. Review Your Portfolio Regularly
   

   A robust expat investment strategy is always flexible. As market conditions evolve and the world transforms, your portfolio should also shift to reflect these real-world changes.
   
   You must review your portfolio regularly to course correct, cut out the dead wood and add new opportunities.
   

10. Work With Professional Financial Advisers
    

    Not everyone has the time or the inclination to understand the investing ecosystem or to micro-manage their portfolios. Hence, for people who can’t or won’t manage their portfolios, working with a financial adviser is an excellent way to avoid bad investments.
    
    Experts have incredible knowledge at their fingertips and can help you navigate the complexities of investing as an expat.

    Our Verdict

    These common-sense strategies can be useful but do consider working with an experienced expat financial adviser to steer clear of unnecessary investments and make informed choices to support your long-term financial well-being.
    

    The Wealth Genesis is fully regulated to provide unbiased, commission-free financial advice to Expats around the world. To discover how we can help you, get started using our online form.