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What is an International Investment?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 15 September 2016
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An international investment is an investing strategy in which non-domestic investors choose to purchase options related to the economic institutions and the currency related to a specific nation. The idea behind this approach is to increase the value associated with that national currency in relation to other currencies around the world. By engaging in this type of activity, investors can in turn increase the value of other holdings that are also associated with that nation, sometimes selling those investments at a considerable profit.

The core of international investment is a carefully orchestrated plan that will help to improve the prospects of a given country in terms of international trade. By contributing to the stability of that nation’s infrastructure, it is possible to secure investments based in that nation at a low price, hold them until the currency improves in the foreign exchange market, and the value of those acquired shares increase to a point the investor considers desirable. At that time, the shares can be incrementally sold off at a profit, allowing the investor to slowly withdraw from the foreign market without arousing much attention. As a result, the investor has engaged in the trade to earn significant returns without undermining the economy of that nation.

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There are several factors to consider when planning an international investment strategy. One has to do with the opportunity costs associated with the assets that are acquired. The idea is to identify investments that will fit well into the overall scheme and that show promise of gaining in value as the strategy advances. When applied correctly, the potential costs are easily offset by the potential gains. At the same time, the investor will be monitoring the impact of the investments on the general economy and how those efforts are in turn impacting the relationship of the nation’s currency with other currencies on the Forex market. With the right blend, the end result of the international investment strategy is the chance to not only profit from the purchase of stock and commodities, but also to earn some returns from currency trading as well.

As part of the international investment approach, the focus may not be on acquiring shares of stock but in actually establishing a business operation within a specific foreign country. For example, a group of investors may choose to open a manufacturing facility in a given nation as a means of stimulating the economy while also producing goods at relatively low prices that can be exported and sold at a considerable profit. This approach is often a good option when there is a desire to structure the investment strategy for long-term use.

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