Warren Ingram explores new and unforeseen challenges – and a load of new opportunities – in Global Investing Made Easy
More about the book!
Written by the bestselling author of Become Your Own Financial Advisor and How to Make Your First Million.
Penguin Random House SA has shared an excerpt from Global Investing Made Easy, the new book by Warren Ingram.
Investing overseas can be a very intimidating, even scary, subject. Even though many of us would love to invest internationally, we have limited information on how and where to place our money. This book will demystify global investing by providing novice investors with practical guidelines on how to invest overseas while helping them to avoid the inherent pitfalls.
Global Investing Made Easy covers all the main aspects that a non-financial person should know before embarking on a global investment journey and will be helpful to investors across the globe. People of all ages and levels of wealth will benefit from the practical, easy-to-understand, jargon-free information required to invest in the international markets, proving that financial freedom is possible for everyone.
Warren Ingram is an award-winning financial planner and respected personal finance commentator in the media. He has written two best-selling personal finance books and is the co-founder of Galileo Capital, where he has been managing global investments for private investors for more than two decades. Warren hosts the Honest Money podcast and often appears on radio and TV to discuss personal finance and investment topics.
Read the excerpt:
This book, which I wrote during the Covid-19 pandemic, was inspired by watching Donald Trump make terrible decisions in the USA’s early handling of the pandemic and the European Parliament’s dallying in securing vaccines for the citizens of its member states. While this was happening, the tiny state of Israel started procuring and vaccinating its people at lightning speed. Australia took the decision to lock out the rest of the world to isolate the country from Covid-19. How could we forecast which country would do well and how would the economies of the world endure lockdowns and other trade restrictions? I observed scientists, economists and other prognosticators forecasting the end of the world, while deep thinkers like Bill Gates were heralded as prophets for their earlier predictions that pandemics would become the next big threat to the world. Finally, I also learnt that the global media and all their expert sources had only one word to describe the situation: ‘unprecedented’. This has to be the word for 2020!
As someone who has spent more than 25 years advising investors about their money, I found that this situation presented some new and unforeseen challenges – and a load of new opportunities. The first major challenge was to realise that no one had a realistic idea of how the pandemic would affect us in the short term, nor did anyone know what would happen in the long term. As soon as I realised this, I was back on familiar ground, because I understood that we were in the middle of an unpredicted event that would cause human beings to react in a predictable fashion.
Predicting how things will work out is always an entertaining but ultimately not very reliable way to make decisions about how we live, work and invest. We have to realise the future is always unpredictable. The pandemic provided an important lesson for our understanding of investments: when we learn that we cannot predict the future, investing becomes much easier. If we follow some basic principles and focus on a few key issues, we can ignore the noise. A key principle of investment is that investors need to spread their money far and wide when the world around us is uncertain. The more uncertain things are, the more we need to spread our money because unpredicted events will also create unpredicted opportunities.
Investing in many different countries and assets will enable us to benefit from opportunities that we could never have predicted. Consider the rise of Zoom during the pandemic; a relatively small business benefited greatly from the unexpected circumstances. What about a tiny, new biotech company that suddenly becomes a household name because it is lucky enough to be working on vaccines when a pandemic strikes? Investing our money in many different countries and industries means we can benefit from unexpected growth and reduce the impact of unexpected losses on our investments.
Very few books focus on global investments. There are many American books on investments, and some are written by investment experts, but most of the popular books are written by motivational speakers looking for content to promote their next series of talks, podcasts or TV shows. This book aims to expose you to the wide world of global investments – a world that may seem risky or dangerous. I hope to show you that global investing helps reduce your risk while ensuring more consistent growth for your money over time.
Most investors tend to invest too much money in their home countries and not enough in the rest of the world. In this book I describe how my thoughts and beliefs about investments evolved over time. As I learnt more about investing, human nature, markets and life in general, I came to realise that while many of my earlier ideas about money management may have been correct, I did not spend enough time focusing on the human being behind the money decisions. It is not enough to explain the theory of efficient markets, compounding, diversification and remaining invested in turbulent times. As investors we also need to understand that each of us thinks about money differently. Understanding the science of money is only half the story; the other half is understanding how we as human beings make decisions. Once we understand ourselves and what drives us to make financial decisions, we can consider the theory of investments and determine the best course of action to suit our needs. That means each of us might have a slightly different approach to investing, and what works for one person might not work well for another.
It is worth remembering that investment markets have been around for centuries. Over time, technology has changed every aspect of life. There is a misconception that all these changes must have a fundamental impact on markets. However, Jesse Livermore, a pioneer of day trading, said it best: ‘Wall Street never changes, the pockets change, the suckers change, the stocks change, but Wall Street never changes, because human nature never changes.’ Technology accelerated stock market cycles, as information now moves around the world in an instant. However, there has been no change in the basic behaviour of markets: we still have long periods of rising markets followed by irrational exuberance and stock market crashes. Then follows a period of mourning and consolidation before the cycle of rising markets begins all over again.
Uncertainty is a fact of life, and the Covid-19 pandemic has taught us that life can change in a heartbeat. Poor decisions by politicians can have a crippling effect on a country’s economy, and this can affect our lives directly. Large countries are not immune from bad politicians, economic crises, pandemics or climate change either. For investors this means starting to think about investment differently. It is important to understand that our investments can live and work in many different countries and industries; our money doesn’t have to be bound to one small part of the world. Just because someone works in the UK or Australia doesn’t mean they should be investing all their money in those countries. In fact, we should consider investing far from home to ensure that we take advantage of opportunities not available to us in our home country. Global investing is a way of managing unforeseen risks that might have an impact on our own country.
As the world is becoming more integrated, it is also becoming much easier to make informed and reasonably safe investments in foreign markets. Investors who remain fully invested in their home country are limiting themselves and exposing themselves to risk. Even for those who are not planning to ever live in another place, it still makes sense to send money off to other countries to benefit from their industries, climates, resources and technologies.
If you have read my earlier books, you will notice many common themes in this one, but I hope you will find it evolutionary. For my new readers: my aim is to provide you with an impartial education on investments. I believe that we can reduce our mistakes by understanding more about money and about ourselves. The path to financial freedom is not to find the best investments in the world, but rather to avoid the biggest mistakes, remain consistent, and let our money grow while we sleep and live our lives!
Dollars or pounds?
One complication when writing a book about global investments is that of choosing what currency to use, so I would like to clarify my choice from the outset. You might be living in the UAE, the UK, Australia or South Africa, and it would obviously not be sensible to cover every country in every example. I chose to use US dollars as my default currency when discussing investments, case studies and concepts. The USA still has the largest stock market in the world, and its currency is often the default for global portfolios.
This doesn’t mean that all the investments I refer to will be US-based. For example, if you live in the UK and your global investments are denominated in dollars, you will most likely have money invested in China, Taiwan, South Korea, Germany, Japan and other countries. However, these investments are generally consolidated and priced in one currency, often the US dollar, so that you can monitor and manage them more easily.