Investing for Millennials: Far from Home

Millennials Should Take Advantage of Investing Overseas

Across generations, times have changed in terms of investing. Many millennials feel that they have the short end of the economy stick compared to the previous generation - essential living costs such as education, housing, and health care have skyrocketed, leaving the current millennial generation with little money to spare for retirement. They have student debts to pay off, buying homes seem like an insurmountable challenge, and overall living costs have increased.

In regards to investment, baby boomers had a simple strategy: bond yields were among the highest during their time, and investing is a one-tracked programme where one would invest in infrastructure, health care, oil and gas, etc.

Nevertheless, millennials have an advantage compared to their parents and predecessors. With the globalisation and far-reaching opportunities that technology has provided, millennials can choose to invest their capital onto a wide international stage. Not a couple decades ago, there were limited choices to invest overseas. In this era, they can peruse the global market.

Certainly the current global stock market looks more promising, covering many industries. Although one may be hesitant to invest in an unfamiliar avenue, the yield returns prove their worth. For comparison, the traditional S&P 500 Index offers at meagre yield of 3.7%; on the other hand, the MSCI World Index reports a 6.4% yield, and the MSCI Emerging Markets Index at 8.4% yield.

Broad market indexes have also adjusted to new players. Japan’s stock markets yield stands at a low 4.2%, while Hong Kong’s yield broke records at 8.2%. India’s low yield of 3.5% is tied with the United States, while Russia takes the lead with an outstanding 10.3%.

Even so, there are some pointers to consider before one pours their entire savings into foreign markets. The UK is struggling with Brexit, China is engaged in trade war with US, South Korea in a heated dispute with Japan, while Russia is coping with issues from the energy sector. Some economic specialists have forecasted a period of “deglobalisation” where markets may move into recession until their problems have been resolved. On that note, some markets may survive the ordeal better than others - with that said, having a portfolio with a diverse range of international investments may prove to be a saving grace.