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Health & Fitness

International Investing - Australia

The world is a big place – there are over 190 countries and 7 billion people in the world, which really boggles the mind if you sit down and think about it. In addition to being an interesting intellectual exercise, this fact can also have broad implications for your investments and your financial future. It is easy to stay focused on U.S. firms, news, and events during the day-to-day grind, but it is always important to be aware of your surroundings – especially when it comes to your investments. With that in mind, this series of articles will focus on countries and investment opportunities outside the United States that you might not usually hear about.

 

As always, be sure to consult a financial services professional familiar with both the potential investment and your unique financial situation before embarking on any investment program.

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Australia

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Australia is often featured on international real estate shows as a warm and sunny paradise that is a welcome change for people from colder climates. Australian culture extends to Outback Steakhouse and Foster's beer -- both of which have excellent brand recognition and earning power in the United States. Australia is much more, however, than warm beaches, cold beer, and barbecued food. Australia has been an economic success story over the last two decades and might be well positioned to add to your portfolio.

 

The first, and most prominent, reason that Australia might be a good fit for your investment portfolio is the location, location, location. Positioned in the what has been the fastest-growing region in the world, South East Asia, and by forging strong trade agreements with China, the nation has benefitted greatly from the growth in the region. The impact of this location cannot be overstated - Indonesia, South Korea, China, and Japan all trade with Australia, and Australia has been able to take advantage of its natural resources to leverage these agreements into economic success. Strong legal protections for intellectual property, a highly educated and multilingual workforce, and a top-10 education system create an environment that is hospitable for trade, development, and investment.

 

When looking at investing in Australia, there are two primary ways to go about it – ADRs or direct purchases. An ADR is basically a certificate held by a U.S. banking institution that represents a certain number of shares in the foreign company, and is held by the U.S. institution. This helps to cut down on the administrative fees and other costs that would otherwise be incurred. For more direct exposure, you can also purchase shares directly from Australian  stock exchanges if your broker offers those services to its retail investor base (you and me).

 

Some of the largest and most well known ADRs that are available for investment are Genetic Technologies (pharma), Lihir Gold Limited (commodity), Novogen (pharma), BHP Billiton (mining), and Westpac Banking (finance). If you are looking for an ETF that tracks Australia or is heavily exposed to the economy of the nation some options are MSCI Australia Index Fund ETF, Australia Dividend Fun ETF and IQ Australia Small Cap ETF.

As always, I have attached some links with more information

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