Worldwide Emerging Markets

By Author: Lecia Selbo
Total Articles: 49
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Knowing where to invest is never easy, but with interest rates so low and the markets so turbulent, 2011 is going to be a year tougher than most. Having said that, there are still places proving to be profitable.

They aren''t hiding in caves or under rocks, they are out there in plain sight, but few of us can see for looking. So, where should you be betting your bottom dollar? Emerging markets.

So what are emerging markets exactly?

Emerging markets are the fastest growing economies in the world. They are going through rapid industrialisation. They are broadly divided into two groups: upper middle income or high income.

The most advanced emerging markets are Brazil, Russia, India and China. These countries are likely to play a key role in driving global economic recovery and growth. They have young, working populations, growing middle classes and relatively lower national debt than many Western nations.

Is an emerging market a safe bet?

In the long term, yes. However, they are more volatile and fluctuate more than advanced economies such as those in the UK and US. But, in many cases even ...
... short-term losses are less in emerging markets than they are in more developed countries.

You have greater potential to see much bigger returns on your investment, although, to be on the safe, you should view your investment as a long-term one.

Risk is elevated for other reasons too, owing to the fact that investment markets are not as well developed in places such as Brazil and India. There are roughly three reasons for this; firstly, investments are less regulated; secondly, they may be harder to buy and sell and thirdly, countries such as these often have unreliable arrangements for the safekeeping of assets.

How to invest in an emerging market?

One of the best ways is through an emerging market linked ISA. Through an ISA you can invest up to ?10,200 tax free, so you won''t pay any capital gains tax on your returns.

Alternatively, you can invest an unlimited amount in a fund-managed investment.

You may invest in funds that use currencies other than the British Pound. This can be a good thing if these currencies appreciate in value, but if their value falls so will your investment.

To reduce risk as much as possible, invest in a fund. Many banks offer emerging market funds that are passively managed by people that know what they are doing. Legal and General is one of the leading names in personal investment in the UK. It manages ?202 billion of index-tracked investments. Lecia Selbo is a financial expert with over 15 years experience. They recommend Legal and General for identifying emerging markets.