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3 economies you cannot afford to overlook in your investment portfolio

3 economies you cannot afford to overlook in your investment portfolio

When it comes to investing, diversification is key to protecting and growing your long-term wealth. Besides investing in diverse industries and within different companies, investors can also look to invest in economies outside of Singapore.

While Singapore does have a strong economy with many established companies, history is full of examples of how companies, and even countries, that were once strong ran into economic headwinds.

By looking at economies that are doing well and supported by strong fundamentals that aids long term growth, investors can not only spread their risks, but ride on potential economic growth waves or positive momentums.

Indonesia


Bolstered by a youthful population that is already the world's fourth largest, Indonesia's economy is expected to continue growing strongly in the next few decades. It is estimated that, by 2050, Indonesia's economy would grow to be the fourth largest in the world.

In the near term, Indonesia can leverage on Southeast Asia's bustling growth engine. The region, with a population of over 630 million, offers a market larger than Europe, Australia or North America. A report by McKinsey also highlighted that the region has continued to be one of the fastest growing in the world, behind only China and India.

With ASEAN sandwiched between the economic powerhouses of China and India - facilitating trade flow and attracting investments from these regions - it will only stand to benefit in the longer term.

The International Monetary Fund (IMF) predicts that the country will continue deliver stable and long period of robust growth expanding 5.3% in 2017.

United States of America


As the largest and most productive economy in the world, the USA accounts for one-fifths of the global GDP with less than 4.5% of the world's population.

Despite abandoning the Trans Pacific Partnership (TPP) agreement and renegotiating the North American Free Trade Agreement (NAFTA) which may see it lose some credibility in the international marketplace, it's also hard to look past the United States of America (USA) when it comes to investing.

It is likely that the country will be able to continue driving this momentum with many of the world's most innovative and technologically advanced companies based in the country. In addition, the best ranked schools, creating a pipeline of the best talents around the world, are also located in the country - interestingly four of the top five universities were based in the USA at the latest QS World University Rankings.With Trumponomics (economic expansion on the back of Trump's policies) also on the cards, the country can expect higher domestic production and higher inflation levels in the near term. The USA is also expected to continue growing at a rate of 2.2% in 2017. This is corroborated by the United Nations Conference on Trade and Development (UNCTAD), which states that the USA remains a favourite foreign direct investment (FDI) destination, with a world-leading inflow of US$391 billion in 2016.

India


Expanding at a rate of over 7.0% since 2014, India has overtaken China as the world's fastest growing major economy. Moreover, the World Bank has also projected the country to grow at a rate of over 7.5% till 2019

India also has a very young population, in fact younger than Indonesia, at an average age of 27.6 years (according to the Central Intelligence Agency, CIA). This is much more powerful when compounded with the fact that the country is expected to surpass China to be home to the world's most populous country by 2020.

Up to 70% of these people still live in rural parts of the country, which means a wave of urbanisation will continue to drive growth for a long time. At the same time, workforce participation by women in India is also comparatively low, and this may change as the country continues to develop and educate its population.

Indian Prime Minister Narendra Modi, who was voted to lead the world's largest democracy in 2014, has embarked on several economically-friendly and business-friendly policies to ensure better and more sustainable growth. Part of this also meant reining in inflation fears and improving consumer spending powers.

Investing into these economies


Investing in foreign countries has never been easier. With better access to market and information available in public domains, investors are in a great position to be able to tap on growth and opportunities in overseas countries.

There are numerous ways to get invested in overseas markets. You can open up foreign brokerage accounts and invest directly into those markets. Alternatively, you can also invest in them via local brokerages that offer overseas investment products.

These methods have their pros and cons, but both require you to take an active attitude towards selecting the right investments. One other way you can put your money into overseas markets, especially when you may not have as much information as local markets, is to begin with funds.

dollarDEX offers a diverse selection of funds focused into specific geographic regions or industry sectors and asset classes. . With our fund finder tool, you can easily get started by picking a fund of your choice. Once you understand these markets more, you can further diversify your portfolio with other funds.