News Americas, NEW YORK, NY, Mon. June 14, 2021: Any good investor knows about the importance of diversification. Creating a diversified portfolio is about so much more than spreading your money across different industries. Gaining exposure to international markets is just as important.
Although most people consider the Caribbean to be just sandy beaches, colorful cocktails, and reggae beats, this is a region with a huge amount of potential.
Before expanding your stock fund to the Caribbean, here are some top tips for nailing a profit.
- Know Your Stock Exchanges
There are around a dozen unconnected stock exchanges in the Caribbean novice investors must be aware of. Unlike American and European stock exchanges, the Caribbean exchanges are far smaller and less famous.
By far, the biggest stock exchange is the Eastern Caribbean Securities Exchange on St. Kitts. The Jamaica Stock Exchange, Barbados Stock Exchange, and Trinidad & Tobago Stock Exchange are other potential avenues of investment.
Did you know that the Jamaica Stock Exchange is, pound-for-pound, the most lucrative stock exchange in the world?
- Do Your Research
Like with all profitable investments, you must be willing to conduct an in-depth analysis beforehand. Tools like Benzinga Pro are perfect for getting the latest financial news out of the Caribbean. Find out more about this financial news aggregator by reading this Benzinga Pro review.
Due to the fact the Caribbean exchanges gain less exposure, finding reliable data can be more difficult than investing at home. You must be willing to commit the time and effort to execute proper research.
We also recommend the Motley Fool for an introduction to investing in the Caribbean. Look at this review on Motley Fool for a better idea of how this platform can inform your stock picks.
- Set Future Goals
What do you want to achieve by investing in the Caribbean stock market?
Your strategy should contribute towards these goals. You need to figure out what advantages you’re going to take advantage of by diversifying into the Caribbean.
Here are some examples of future goals from different investors:
- “I want to take advantage of an emerging market with high growth potential.”
- “I’m looking to diversify away from U.S. centric stocks.”
- “I want more exposure to global markets.”
These are all examples of good reasons to invest in the Caribbean. Remember, the whole point of investing globally is to create a stronger portfolio and to minimize your overall risk.
- Invest for the Long Term
Making long term picks is the key to success in the Caribbean. With far fewer investment options on the Caribbean exchanges, newer investors may be disappointed. Instead, see it as an opportunity for long term investing.
The Caribbean is an emerging capital market with significant growth potential outside of travel and tourism. Plus, many stocks tend to be cheaper in this market, particularly when leveraging the buying power of the average American.
Although Caribbean markets tend to display large levels of volatility, long term investing can help you to overcome the ups and downs in the regional economy.
- Buy Stocks on the Right Island
The biggest threats to any investor are fees and taxes. Anything you can do to lessen those two charges will put thousands of extra dollars in your pocket over time.
Fees can be minimized through investing with the right brokerage. For example, we recommend the low-cost, no-commission investing platform SoFi Invest for building your portfolio. Check out this review on SoFi Invest for more information.
You also need to adapt your strategy to the island you’re investing in. For example, when dividend investing we would advise avoiding Jamaica because they levy a 15% tax on all dividends.
On the other hand, Jamaica has a 0% capital gains tax, meaning that you should be looking at companies with the potential to grow their share prices in the years ahead.
Adapting your strategy to the strengths and weaknesses of different parts of the Caribbean is key to minimizing your costs.
- Cut Through the Noise
Research is important, as is ongoing research. However, it’s easy to associate international investing with additional risk. Avoid getting carried away by financial news across the Caribbean.
Commit to staying in the market for a minimum of five years. If you’re unwilling to hold a stock for that long, it’s not the stock for you.
Never attempt to time the market. Short term trading typically leads to magnified losses and a lot of stress.
Final Thoughts
There are so many reasons to begin investing in the Caribbean. It’s a relatively undervalued market, with most investors not even thinking about expanding to this part of the world.
While not as glitzy as the European markets or as lucrative as the U.S. markets, Caribbean investing presents an opportunity. Make sure you do your research and manage your finances carefully before diversifying into this region.
Have you considered investing in Caribbean stocks?
