Overseas property is becoming a popular investment choice these days. Many people in wealthy nations are purchasing properties in other nations to use as retirement homes, holiday homes or as an investment. Most countries welcome the invasion of foreign property owners, because it is often beneficial for the local economy, and brings with it foreign currency. However, some countries resent this practice, and even have legislations to prevent foreigners from owning any property.
When it comes to investing in overseas properties, the world is a big place as there are various destinations to choose from. There has been a significant increase in the number of people buying property abroad solely for the purpose of investment. Although there have been global predictions about the slowing down of the real estate market, this trend does not seem to be abating. Investment in property is seen as one of the best ways of diversifying savings from the inconsistent and risky stock markets.
If you examine the various asset classes, property is generally less volatile than stocks or shares, and tends to bring long-term profit to people who invest sensibly. However, even though property investment has many advantages in terms of building wealth, it can be risky as well. During the global property boom in the 1980s, many investors learnt that their properties were worth far less than they had actually paid for, and the bottom, seemingly, fell out of the over-inflated market.
However, the prices of properties in some countries are soaring, and first time buyers are trying hard to be on the first rung of the property ladder. Newly discovered property markets are expanding quickly in several countries. For example, South Africa, North Cyprus, and Bulgaria are some of the countries where potential investors can get an incredible value for their money by investing in property.
Property markets in these countries have always been artificially restricted due to political instability or the threat of war, but now that they are stable countries, being governed by people with a first world perspective, and investors are finding potential and diverse markets in them. Other promising markets for overseas investment are: Poland, Malta, Cyprus, and the Czech Republic. Slovakia, Hungary, Croatia, and Turkey are also lining up with solid emerging property markets.
These countries are making efforts to improve the infrastructure and economy, which is the reason property speculators are getting attracted to such markets. Dubai is another country that has interesting and lucrative investment opportunities to offer. The crown prince of Dubai, Sheikh Mohammed bin Rashid Al Maktoom, issued a decree in order to allow foreigners the right to purchase freehold property in Dubai. This has led to the explosion of the property market in this country.
Properties in Dubai range from simple one-bedroom flats to exclusive freehold islands, and still offer good value for money. The business and tax advantages in this country are very appealing, and this is the reason why the property investors are enjoying an upward trend in long-term profits. France, Spain and Florida, the old favorites with a long history of property investment, are where Northern Europeans and Britons especially invest. These countries offer the investor potential for the growth of their real estate, whether they look for a home for holidays, or as long-term investment.
Investment in overseas property or real estate is a tried and tested method for long-term gains, but you need to consider whether the property investment matches your circumstances, and if it is right for you, as there is an amount of risk involved in it.
Long-term gains using a dollar cost averaging plan.
Dollar cost averaging allows young investors to purchase stock investments consistently over a longer period of time. This stock market strategy works especially well with broad-based market index investments like the mutual funds and ETF's that mirror the return of the S&P 500. This powerful and simple investment plan will help lower risk and you have the potential for higher returns.
For young investors looking for consistent gains over time, establishing a dollar cost averaging plan could be a perfect solution. Young investors are able to purchase more shares when the stock market experiences short-term corrections. That way when the index turns around and starts heading up in value young investors are able to profit more because they own more shares.
When the market is rising young investors are able to capitalize on the market trend because they are following a consistent investment plan. As they purchase more and more shares in a bull market that money is going to work for them right away.
Dollar cost averaging spreads the prices that you purchase stock market investments (cost basis) over a longer period. Investors are protected from stock market corrections and benefit from long-term gains in the market.
Steps to creating an effective dollar cost averaging plan.
For young investors creating a successful dollar cost averaging plan is simple. There are two basic steps that will get your money working for you:
1. Decide on the exact amount of money you will invest each and every month. The key to a successful dollar cost averaging plan is consistency. You can increase your investment over time but avoid investing different amounts each month.
2. Set up the exact times you invest. If you decide to invest once per month do so on the same day. For instance, the fifth of every month invest $150. It gets even easier when you put your dollar cost averaging plan on auto pilot. Set this up one time and your investments are made automatically for you each and every month. All you have to do is check your statements to see how your investments are doing.
Improve your dollar cost averaging plan through diversification.
Diversification is a simple spreading out the risk of owning a stock investment by owning many different stocks in a variety of sectors. Owning a group of stocks, instead of an individual stock, could further reduce your risk. This will reduce the risk of owning any single investment. The investment of choice for many young and beginning investors is broad based indexes.
An example of a broad based market index is the S&P 500. By investing in the S&P 500 index you own a piece of every stock that makes up the S&P 500. Stocks like American Express, Google, Ford, Nordstrom, Home Depot, Staples and Yahoo are a few of the stocks that make up that index. That way you're protected in case one of the stocks in the S&P 500 drops 70% of its value, you're only invested 1/500th, and you won't experience too much loss from that. In comparison, if you just owned that stock by itself you would have lost 70% immediately.
For young investors, keeping your investments diversified and using a dollar cost averaging investing technique - you have effectively reduced risk and are in an excellent position to achieve long-term profits.
Both Kris Koonar & Vince Shorb are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
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