Global influences in investment markets have become more powerful over the last decade, due to the effects of technology, globalization of businesses and economic union between countries. The Global Financial Crisis is a powerful example of how interconnected world investment markets are now. This is not necessarily something to be afraid of and in fact there are many opportunities as well as threats. There are five good reasons why it makes sense to invest offshore right now:
- New Zealand is a very small part of the global economy and investing in one, very tiny market makes little sense when you take a global view. Diversification is a good reason to invest offshore. The impacts of natural disasters and adverse economic events can be lessened by spreading investments far and wide across the globe.
- In the medium term, it is known that global growth will be driven by emerging economies such as China and India and not by the developed world. Leave these countries out of your investment portfolio and you will miss out on opportunities for good returns.
- The New Zealand economic outlook is uncertain following the Christchurch earthquake. In the short term at least, the earthquake is likely to have a negative impact. Economic growth will be dependent on exports and business investment.
- Our exchange rate is at a historic high point in relation to currencies of our major trading partners. Investors placing funds offshore now will not only get more for their money, but they will stand to gain again when the exchange rate drops as it inevitably will.
- It is easy to invest offshore through managed funds, using the expertise of fund managers who understand the markets they invest in.
Overall, investing offshore opens up opportunities for increased returns and reduced risk.