The Pros And Cons Of Portfolio Investment

Investing is an important aspect within the international community, it is what keeps the cycle of capital and the world itself in rotation. investors have the potential for higher rates of return abroad compared with that of domestic stocks, “International stocks are an ever-expanding part of the investment world and investors have the potential to lower the overall risk in a portfolio.” The money from these investments can fund other countries and their state projects, which later benefits their citizen and the economic flow. Many investors invest money through either portfolio investment or foreign direct investment’s two major ways to invest provide a beneficial process to both investors and those who the receivers. But, with financial

“Foreign direct investment, also known as FDI, is an investment in a business by an investor from another country for which the foreign investor has control over the company purchased.” A portfolio investment is an investment made by an investor who is not involved in the management of a company. This gives the investor a claim of income but excludes their managing role in their investment, it is a hands off investment process. This creates security issues for the investors and has to implement a lot of trust into the country for the project with expectations of earning their return back. Both the portfolio investment system and the direct investment system differ from each other in number of different

Cost and issues may arise in the cooperation and bargaining process, this is when the two are ineffective. Issues may arise that damage the bargaining relationship such as lack of information and default. These issues will only lead down a negative path hurting the country and its economy as well as the investors. In this case “both countries have intentions to cooperate and settle resolutions. But because each side wants to get as much out of the relationship as possible, it can cause tension in the relationship. The lender wants their debt repaid in full while corporations wants to gains profits from their foreign investments. Due to the various issue that may occur during this interaction many may suggest the development of a foreign investment organization to manage the