How to Invest Overseas - Intelligently!

In recent months, many advisors talked a lot about the wisdom of investing abroad, but most have not really addressed the way to do that. For new investors, investing in the U.S. is challenging enough, but investing across borders is often even more daunting.

Many important issues need to be addressed, but the first step is to decide how to buy and sell. Here are some possibilities:

1. Direct purchase in foreign markets. The easiest way to invest in foreign markets by buying shares directly in the regional or national markets. This approach has some drawbacks, however. Firstly you need to buy one through an account with a broker that is registered in that country. For Canadian stocks, this is relatively simple, because connecting many U.S. brokers the exchange of Toronto. But beyond that zone leaves us with little, and expensive choices. Plus, many shares on foreign exchanges are not subject to the same reporting requirements as those on the NYSE or NASDAQ. So we can not be available to learn in this way. Enough about the financial status of many international companies Also, because they sell in foreign currency, the shares must we calculate all the rates.

2. ADR. ADRs are foreign shares (actually, certificates representing such shares) to sell in the U.S. markets. As such, they are required to provide all reporting requirements and U.S. securities laws, and thus to fulfill. Much more transparent Plus, the shares are priced in dollars, to simplify the purchase process. ADRs are the most common method for American investors to invest in foreign stocks, and include some of the names that I have recommended in the past, including Unilever, Telefonos de Mexico, America Movil, Korea Electric, Canon, Nokia, and Bancolombia , among others.

3. U.S. multinationals. An even easier way to play foreign markets to invest in U.S. companies doing business abroad. Companies like Apple, Coca-Cola, Procter & Gamble and do business around the world almost as much as they do here in the U.S.

4. International investment funds. Mutual funds simplify the process of investing abroad. A buyer may hold a fund dozens of different stocks that fund managers have examined can purchase.

5. International index funds, Exchange Traded Funds, such as iShares (formerly known as webs), the benchmark indexes of foreign markets. Buying an index makes it possible to win a broad market rather than trying to study individual stocks.

6. Closed-end Country Funds. Like index funds above country funds focus on a particular market. The difference is that these funds are actively managed, and can often be available at a discount to the value of their shares. If watches carefully, you can sometimes get great deals in these shares, which trade like stocks. Some examples are the Swiss Helvetia Fund, the Fund Brazil, or New Ireland Fund. Closed-end funds may also be available that invest across borders, such as the Emerging Markets Telecommunications Fund, the Templeton Dragon Fund, or the Latin American Discovery Fund.

In the end, there are many ways to invest internationally. Use common sense, but make sure to take advantage of the opportunity to diversify across borders. One thing is certain: there is no longer any excuse for keeping all your eggs in a (national) basket.

Scott Pearson is an investment advisor, writer, editor, instructor, and business leader. As President and Chief Investment Officer of Value View Financial Corp., he offers investment management services to a wide range of clients. His own newsletter, Investor's Value View, is distributed worldwide and provides general money tips and investment advice to readers both internationally and in the U.S.