Tips for Investing in the Emerging Market

It is fair to assume that seasoned investors know about the emerging market.  They know that the potential for great returns is there, and they also know that this great return usually comes at a high risk.  The emerging market describes the economies of developing countries, such as China, Russia, and Brazil.  It also includes other countries in Asia and South America, together with countries in Africa.

Given the high risk status, these tips have been written with a view to help you invest wisely into the emerging market.

The Long Term: An investment into the emerging market should be made with at least one eye on the future.  If you are looking for a quick return from your investment then many financial advisors will advise against the emerging market.

If you were investing in America in 1920s, over 40 years you would have gained a substantial return.  You would also have seen prices hitting the floor.  This scenario has been likened to the emerging market.  Yes, you should make a good return but it may take a while before it is realised.

Ask questions, receive answers:  Advice is essential for any kind of investment, and it is especially prudent for the emerging market given the high risk nature.  Many investors ask questions of banks, financial advisers and other institutions which seems like a good idea on the surface.  Though knowledgeable, there is a tendency to make all the decisions on your behalf even though you are more than capable of doing so.  This, as you have probably guessed is all done for a fee which you pay for.

There are some financial companies however, which are just as knowledgeable in fields such as the emerging market, but let the commonsense decisions be made by your commonsense.  Most peoples commonsense charges 0% commission.  When you look for advice, try and find a company that is both knowledgeable about the emerging market and is happy to only step in when needed.

Return vs Risk: The emerging market is an area of high risk for investors, but the allure is obviously high return.  To make an emerging market investment more viable and to offset the risk, a financial portfolio should be comprised of investments in many areas, and not just one.  This helps to offset risk of investing as if one area fails the other areas take the hit and hopefully perform better.

To offset the risk further finding a good fund manager is essential.  This often becomes a question of faith especially in the emerging market.  As mentioned previously, the better fund managers have enough faith in their ability not to make as much commission as possible through trumping an investor’s commonsense.

Areas which are tipped for emerging market investment are currently China, Russia, and Brazil.  Speak to your fund manager however, as they have a better ear to the ground and subsequently will be able to offer better advice.