Why You Should Invest Outside the Philippines

Updated: April 11, 2024

I advise beginners to prioritize accessibility and convenience when investing. Start with your own bank and open accounts with local brokers. It’s easy enough, and you can become an investor within a few steps.

However, this often results in an investment portfolio that’s limited to the Philippine economy. When the country experiences a down market, all your investments will most likely be down as well, and this is not ideal.

As your financial acumen increases, it’s important to realize that there is a global market that sometimes offers better investment and earning opportunities than the local market.

Today, let’s dive into this essential investment strategy and talk about global investing.

Why invest outside the Philippines?

There are two main reasons why you should invest in global assets.

First is diversification. By spreading your investments across different markets, you’re not putting all your eggs in one basket. This helps mitigate risks because if one market takes a hit, your entire portfolio won’t go down with it.

Secondly, growth opportunities. While your home country might offer stable returns, other regions of the world could be experiencing rapid growth. By tapping into these markets, you’re positioning yourself to capitalize on emerging trends and industries potentially.

Pros and Cons of Global Investing

Pros / Advantages / Benefits

  • Diversification: Spread your risk across different economies and industries.
  • Growth potential: Access markets with higher growth rates than the Philippines.
  • Currency opportunities: Benefit from fluctuations in exchange rates, especially when the PH Peso is weak.
  • Access to niche markets: Invest in sectors or industries unavailable in the Philippines, like global tech companies and oil industries.

Cons / Disadvantages / Risks

  • Currency risk: Exchange rate fluctuations can impact returns, especially when the PH Peso is strong.
  • Political and economic instability: Some countries may pose higher risks due to political or economic factors.
  • Higher fees: Investing in foreign markets may come with additional fees and expenses.
  • Legal and regulatory differences: Different countries have varying rules and regulations that could affect your investments. Local regulations could also hinder your access to foreign platforms.

How to Start and Invest Outside the Philippines

Where do you even begin? Here are some steps to kickstart your global investing journey.

Do Your Research

Start by educating yourself about different global markets, economies, and investment opportunities. Look into major indices like the S&P 500, FTSE 100, or Nikkei 225 to get a sense of what’s out there.

Choose Your Approach

Decide whether you want to invest directly in individual assets or through a fund, such as an Exchange-Traded Fund, mutual fund, or feeder fund.

Local platforms and exchanges can give you direct access to global markets, but they tend to have limited assets and options. Local banks and insurance companies also offer Philippine Peso-denominated feeder funds.

Those with a higher risk tolerance can open an account with a foreign broker, which offers more opportunities for trading and investing in US stocks, forex, gold, cryptocurrencies, and other global assets. These brokers also offer passive income features such as copytrading, robot trading, liquidity pools, etc.

Open an Account

Look for a brokerage platform that offers access to global markets. Your bank or insurance company may already offer these services. However, there are also many online brokers that allow those in the Philippines to open an account.

Currently, I have an active account with XM for more than a year now.

Start Small

Dip your toes in slowly. Begin with a small portion of your portfolio allocated to global investments and gradually increase it as you become more comfortable.

Stay Informed

Stay informed about global news and events that could impact your investments. Economic indicators, political developments, and trade policies can all affect market performance.

Investing Strategies for the Global Market

Passive Investing

This involves buying and holding a diversified portfolio of global assets over the long term. ETFs or index funds are popular choices for passive investors. You can also choose copytrading or automated robot trading for the forex market.

Interested? Here’s how to get started. These are what I use:

Active Investing

For those who enjoy a more hands-on approach, active investing involves researching and selecting individual stocks or actively managed funds based on market trends and analysis.

Dollar-Cost Averaging

Rather than trying to time the market, invest a fixed amount of money at regular intervals. This strategy can help smooth out fluctuations in the market and reduce the impact of volatility.

Sector or Theme Investing

Identify specific sectors or themes that you believe will perform well globally, such as technology, healthcare, or renewable energy.

Remember, there’s no one-size-fits-all approach to investing. It’s essential to find a strategy that aligns with your financial goals, risk tolerance, and investment horizon.

In Conclusion

Investing in global markets opens up a world of opportunities for growth and diversification. While it may seem intimidating at first, with the right approach and mindset, anyone can navigate the global investing landscape.

So, take the plunge, do your research, and start building a truly global portfolio. Who knows? Your next big investment might just be waiting on the other side of the world! Happy investing!

Read this next: Learn How To Invest in Forex & Global Markets in The Philippines

One comment

  1. On a related question, how does the Philippine government tax the US stocks? I went through the BIR website and I could not find any clear guidelines on this. There are clear rules for taxes on domestic stocks but not for foreign stocks. Hope you can help. Thank you in advance.

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