So, you're thinking about going global and investing your money in US stocks?
We love where your head’s at. No other financial market is as big or liquid; meaning that lots of people are buying and selling in the market, allowing you to do the same, easily.
Here are some benefits of investing in US stocks
Big names
The addition of international equities to a portfolio is exciting for a lot of people because it gives you access to some of the biggest companies in the world; like Facebook, Amazon, Netflix, and many more. Think McDonald's, Johnson & Johnson, and Coca-Cola… these are household names that so many of us have grown up with and use every day. Being able to invest in them means more opportunities to capitalize on global market trends (like the tech boom), and further our loyalty to these brands as shareholders.
Currency counts
Exchange rates can potentially offer you an additional opportunity to make a return on your investment. Investing in a stock that is in another currency means you are not only getting the potential benefit of the share’s growth; you are also getting the potential benefit of your local currency weakening while the Dollar strengthens in value and thus, an increase in the value of your overall investment.
Here’s an example of how that might work:
This is just an example and isn’t based on any actual performance of the share or currency used.
You invest $10 into Meta shares. Let’s say that at the time you transferred your pesos into dollars, that $10 amount equated to ₱560.
Over time the value of those shares increases by 10% and your investment is now worth $11, which would equate to ₱616 at your initial exchange rate.
In addition, let's say the dollar strengthened by 15%. That means your investment would now be worth ₱708.40 because of the growth in the value of your shares ($11), as well as the increase in the value of the dollar ($1 = Php 64).
Diversification
Diversification is an investing principle that a lot of people use in their portfolios to manage the risk of their investments. This means that you invest in different types of shares in your portfolio so that your risk is spread.
Diversification also gives you exposure to different types of profit-making opportunities. In the process, you continue to gain access to even more companies, a lot of which are actually global brands.