This post was contributed by a community member. The views expressed here are the author's own.

Health & Fitness

International Investing - Japan

The world is a big place – there are over 190 countries and 7 billion people in the world, which really boggles the mind if you sit down and think about it. In addition to being an interesting intellectual exercise, this fact can also have broad implications for your investments and your financial future. It is easy to stay focused on U.S. firms, news, and events during the day-to-day grind, but it is always important to be aware of your surroundings – especially when it comes to your investments. With that in mind, this series of articles will focus on countries and investment opportunities outside the United States that you might not usually hear about.

As always, be sure to consult a financial services professional familiar with both the potential investment and your unique financial situation before embarking on any investment program.

Japan

Find out what's happening in Montclairwith free, real-time updates from Patch.

Japan is one of the world’s largest and most dynamic economies with global brands that are known throughout the world, but that might have been overlooked by investors with the intention of diversifying internationally. Whether it was due to the fact that the Japanese markets, and economy overall, have been suffering from deflation (the reverse of inflation) for the last few decades, or more recent events such as Fukushima, Japan might not ordinarily come up in the conversation.

As the third largest economy in the world there are multiple benefits to be had from investing in Japanese firms. A highly developed infrastructure, pro-business administration, highly-educated workforce, and an economy that is diversified between services and industrial manufacturing. The recent political stability, and accommodative measures instituted, known as Abenomics, has proved a boon to both corporate earnings and overall economic growth. Introduction of individual retirement accounts geared toward domestic equity consumption and consumer spending are forecasted to rise. Sovereign debt levels and an aging population are two of the largest risk factors that many label as the two largest risks associated with investing in Japan.

Find out what's happening in Montclairwith free, real-time updates from Patch.

When looking at investing in Japan, there are two primary ways to go about it – ADRs or direct purchases. An ADR is basically a certificate held by a U.S. banking institution that represents a certain number of shares in the foreign company, and is held by the U.S. institution. This helps to cut down on the administrative fees and other costs that would otherwise be incurred. For more direct exposure, you can also purchase shares directly from Japanese stock exchanges if your broker offers those services to its retail investor base (you and me).

Some of the largest and most well known Japanese firms available for investment are Canon, Honda Motor Co., Sony Corporation, and Toyota Motor Corporation. These represent the underlying diversification of the Japanese economy between services, technology, and manufacturing. Some of the largest and most liquid ETFs available for investment in Japan are iShares MSCI Japan Index, WisdomTree Japan Hedged Equity Fund, and First Trust Japan AlphaDEX Fund.

As always, I have attached some links with more information

Happy Reading!

We’ve removed the ability to reply as we work to make improvements. Learn more here

The views expressed in this post are the author's own. Want to post on Patch?