Imputations credit earned by investing in local companies gives fair tax incentives to Australian people. Also, the familiarity with the market trends along with other benefits keeps majority of investors inclined towards their home market only.
However, by keeping your investments within the local market, you’re hindering your prospects of better profits. The principle of diversification is sound investment theory which unfortunately sometimes get ignored by equity investors.
Below listed are factors to consider before you jump into international share trading in Australia.
Too much concentration work in local markets
The local investment market is capitalized by four major banks in Australia accounting for 50% of the total share. Also, financial and mining sectors account for a major portion of the ASX Index market. Therefore, investing in international share trading can enhance your portfolio. You’ll come into contact with other great business opportunities and hence generate more profits for yourself.
Online Brokers Give Ease
As international share market has been gaining popularity, different platforms are emerging. A few banks have started their retail platforms for sale and purchase of international shares. These international share trading platforms in Australia keep the investors updated with the latest market trends and provide the essentials to generate a proper technical analysis. Therefore, as an investor, you get convenience and profits just by sitting at your home.
Fees of International Trading
A huge differentiating factor between local and international share market is the fees associated with them. International share trading is considerably more expensive than local market and the costs trifold if you’re investing directly in an international share. A few of the costs to consider are the brokerage fees, international transfer, currency conversion and others fees. Usually, a platform fee is also charged ranging from 0.5-1% to the international shares investors.
Signing Up with a Private Bank
If you have deep pockets then signing up with a private bank is a viable option. They provide direct access to international trades however at a much higher cost. The big four banks in Australia all have a private banking division. Banks are open to people that have at least $1.5 million dollars in loans or investable assets of more than $2 million.
Establishing an SMA
It’s always a recommended that as an investor you establish an SMA – managed the portfolio. It’ll give you direct ownership of your investment portfolio so you may tweak your investment strategy accordingly. A distinct SMA is built upon the investment selections and weights of each investment. International share trading platforms offer such services as well to their members.
Plan of Action as a Potential Investor
Firstly, it’s always important to have considerable knowledge about international share trading and the pros and cons associated with it. You should consider both options and choose that suits best to your investment amount and plan of action. Don’t simply jump on the bandwagon but rather give it some time to understand the basics of international share trading.
Most equity investors tend to outperform their counterparts in the local markets which makes them over-confident. They tend to jump into international share trading and find themselves locked in the black hole. The international market isn’t like your Australian market and needs to well-researched upon before jumping in. It’s always recommended that you talk to a professional expert as they’ll outline the necessary guidelines for you. We’ve mentioned a few key points that you should consider and weigh your options accordingly.
A few of International share trading platforms provide quality customer support services, therefore, don’t hesitate to reach out to them to clarify your doubts.