Why We Should be Looking to Invest Overseas
Diversification is the key to any successful long-term investment plan. As such, investing in alternative assets makes good financial sense, particularly property investment, which offers greater reliability and lower risk.
Some investors, however, are wary of buying properties in the UK at present. The market recently experienced significant uncertainty, with events such as Brexit and Stamp Duty changes disrupting established investment trends. This meant that fewer people were willing to purchase, particularly in the capital.
Does this mean property investment is no longer a shrewd move? Not necessarily…
Exploring Options Abroad
Whilst the British market is settling, many wise investors are exploring overseas investments instead. There are a number of benefits to this, including:
- Earning potential. A buy-to-let property offers two income streams; long-term profit from capital growth, and rental yield. Choose a high-performing property in the right location, and you could generate excellent returns in the process.
- Passive income. Like all good forms of investment, a house abroad can be used to make a passive income, without any hassle involved. You’ll need to find a suitable letting agent or property manager to handle all matters relating to the rental, but their cut shouldn’t eat into your profits too much.
- The advantage of a ‘solid’ asset. Properties are fairly unique in the world of investment; offering something tangible and solid for your money. The advantage is that you’ll never see your investment suddenly plunge to nothing – as even in severe recessions, house values will always retain some value. This is particularly the case when you invest in a country with a buoyant, reliable property market.
- Better potential than the UK. Plenty of countries across the world are performing strongly at present, such as Hungary, Montenegro, Canada and Ireland. With prices set to continue rising, it’s likely that you’ll enjoy excellent profit from capital growth when you decide to sell in the future.
- Currency diversity benefits. Buying property abroad offers two forms of diversification – the investment itself, and the currency it was purchased in. If, for example, you bought a property in the US, and US dollars started performing strongly, this would impact your overseas investment accordingly, both in terms of rental payments and selling potential. It’s worthwhile keeping in mind.
- It can be cheaper. Invest in the right country, and you’re likely to find a property at a bargain price. This offers greater scope for further diversification – as it gives the opportunity to purchase more than one house or apartment. With more properties in your portfolio, you’ll then boost your monthly income stream.
- Greater tax efficiency. Some overseas property investments offer tax advantages, as you’re essentially storing wealth outside the UK, which isn’t subject to British tax laws. This may be the ideal opportunity to grow your wealth privately, should you choose to do so.
- Holiday potential. Of course, one of the greatest personal perks of owning property abroad is that you’ve got a holiday home to hand, any time you choose to use it. This benefit also extends to friends and family, and you can even use the house as your main residence in the future.