Many South Africans have been investing offshore to obtain a well-balanced and diversified portfolio that is not overly reliant on the South African economy.
It is important to diversify your financial portfolio, and investing in the stock market is a great way to build long-term financial security.
However, having all of your stocks in South African businesses puts you at risk if the country suffers further economic troubles or has been affected by market fluctuations. Furthermore, South Africa, being a developing economy, carries more economic and political risks that some first world countries..
You should therefore invest a portion of your money in overseas markets.
To do this, you will need a platform that makes accessing global markets simple and cheap.
Benefits of investing overseas
Online investment platforms like Mexem are revolutionising the industry by increasing the number of markets you can invest in.
When you can invest in thousands of promising companies from around the world, investing exclusively in local markets limits your opportunity to grow your wealth.
By investing internationally, you are not only investing in stocks that rely on other economies, but you are also reducing your currency risk on the Rand – diversifying your portfolio even more. Another aspect is that diversifying your portfolio can give an investor more freedom by spreading their risks in both established and emerging markets.
South Africa is an example of a high-risk market as it is an emerging market due to its unpredictability. However, investing in established markets can offer the investor steadier growth.
Diversifying globally allows investors to protect their investments against a weaker currency. Therefore, investors have the opportunity to improve their risk/return profile in their portfolio.
An allocation of one’s portfolio should always be geographically diversified; however it must be remembered that offshore markets also opens up a whole new world of companies to invest in with growth prospects that may not exist in local markets.
Invest with Mexem
If you want to invest overseas, there is no better option than Mexem.
As an introducing broker for the largest trading platform in the US – Interactive Brokers – Mexem is expertly equipped to serve your international investment needs.
The platform allows you to trade on over 120 global markets in 23 different currencies – all at an affordable price.
Mexem allows you to gain direct market access by leveraging the Interactive Brokers trading platform, which saves you money and reduces the red tape involved in the investment process.
Investing with Mexem will also ensure you have a balanced portfolio with adequate offshore exposure which will ultimately reduce your overall risk.
Cheaper trading fees
Mexem stands out when compared to other investment platforms by offering one of the cheapest trading fees in the market.
It only charges clients the standard Interactive Brokers fees, which are significantly lower than those charged by local platforms.
This is because of Interactive Brokers’ global reach, which Mexem leverages to give South Africans the best investment experience.
A comparison of US trading fees across South African investment platforms is below.
|Trading fees across various platforms for retail clients trading in the US market|
|Platform||Commission per trade||Minimum commission (USD)|
|Platform 1||0.35% of value||20|
|Platform 2||0.35% of value||20|
|Platform 3||0.25% of value||20|
|Platform 4||$6c per share||20|
|Platform 5||$3c per share||20|
|Platform 6||$2c per share||15|
|Mexem||$1c per share||1|
By saving money on fees, you increase the overall profit on your investment – making Mexem the obvious choice for South Africans looking to invest globally.
This article was published in partnership with Mexem.