5 Key areas you Need Specialized Planning for Investment Abroad

Exploring different areas within the global markets can be a great decision, if you’re looking to diversify your assets. This will help you mitigate your overall risk and orient your assets to benefit from the diverse opportunities available, beyond your local market. With investment options galore, finding the right mix of asset allocation forms the key, to this seemingly complex and hard to navigate – International Investing; for the new and part-time investors. 

So, there should be a good reason why you, as an Indian Resident or an NRI needs to have an International Portfolio. And as an extension, you should have few checkpoints to consider, while attempting to create a global asset allocation. 

Let’s consider the checkpoints for now:

Home Country: As a first step, you need to identify your base country, a place where your source of earnings is significant (can be more than one country). Thereafter, you may consider diversifying into different markets. As an example, if you have India as your base, you may look overseas to invest in Asian countries, US etc. and create an international portfolio. In a similar way, if you are an NRI in the US or UK, you may consider making investments into Emerging Markets, World ex-US etc.

Present Asset arrangement: Next step is in evaluating your existing mix of asset allocation, holistically. This will include property and other assets, along with financial investments; across all locations. With this information, you can start mapping the economic benefits that your assets may be subjected to, in those locations respectively. Interaction with Financial Advisors from respective locations will help you decipher this. 

Goal based allocation: Next in line, is the direction you intend to move ahead in. For this, you need to pen down your Goals and Objectives for each location and specify the time it will be realised; in the future. This will form a guide, and help you allocate your assets in those locations, with corresponding weightages. The timing of meeting such goals & objectives will help define the duration of the investments. A financial plan will help you chart all of this with ease; with the right advisor.

Liquidity requirements: While planning through this space, you need an investment expert, who understands your situation well. This will help you get into the right investment options (read products); with an asset allocation, designed to meet your liquidity requirements whenever they come due. You should maintain emergency funds, at an arm’s length from the portfolio. A good strategy is to have a portfolio which is global at macro level, and yet meets every goal at a micro level.

Reporting & Taxation: This is clearly a very critical area for any investment portfolio. Unlike market risk, which is diversifiable; the compliance risk has no such feature. Here your association with a right outfit matters the most. With a plethora of potential pitfalls emanating around an international portfolio, due to its presence in various jurisdictions; such as – complex tax codes, exhaustive reporting requirements etc. A cross-border specialist – being well networked, can get you help for different situations, from respective experts.

As much as it’s a matter of great opportunity, International Investments, brings with it an equal dose of complexity. And with ever increasing overload of data from global markets, one must operate within their space with adequate clarity, to venture through this maze.