Why invest in the UK?
Although the United Kingdom (UK) has the world's sixth-biggest economy, it also has the world's largest financial hub, New York. London, in reality, is one of the world's largest cities, with the greatest city gross domestic product (GDP) in Europe. As a result, the United Kingdom is a vital financial centre for foreign investors.
Investors may tap into a market of more than 60 million people, as well as a diversified set of suppliers and partners, and take advantage of a variety of programmes designed to assist businesses of all sizes to thrive, including a £100 billion infrastructure investment promise.
As a foreigner, what can I invest in?
Foreign investors must invest in either UK government bonds or share or loan capital in an active and trading UK registered company within a defined time period (or companies). Investments in offshore companies, trusts, or companies where the investment is stored offshore are not permitted.
Open-ended investment businesses, investment trust companies, investment syndicate companies, and pooled investment vehicles are not permitted. ISAs and premium bonds, as well as property and property management or development enterprises, are prohibited.
How to Invest in the UK Using ETFs and ADRs as a foreigner
Exchange-traded funds (ETFs), which give investors diversified exposure in a single investment that can be exchanged like stocks, are one simple method to invest in the UK.
The MSCI United Kingdom Index Fund (EWU) is the most popular ETF on the market, although there are numerous others that provide exposure to the region.
Those seeking a more specific strategy can buy American depository receipts (ADRs), which are US-listed securities that imitate the movement of a particular foreign company.
What are the advantages and drawbacks of foreigners investing in the UK?
Although investing in the UK is safer than many emerging and frontier markets, there are still several hazards that foreigners should be aware of.
The following are some of the advantages of investing in the United Kingdom:
- Financial Hub: London, along with New York, has one of the most advanced financial markets in the world, making the securities market particularly stable and liquid for investors seeking exposure outside of the US.
- Blue Chip Stocks: The UK is home to several of the world's top blue chip businesses, including Rio Tinto, BP, and GlaxoSmithKline, making an investment in the region less hazardous than other global financial markets.
The following are some of the hazards of investing in the United Kingdom:
- Service Economy: Over 70% of the UK economy is made up of services, which is common among industrialised countries. While this may seem like a good thing, fluctuations in consumer credit and commodities prices may rapidly become problematic.
- Political Risks: The United Kingdom has voted to leave the European Union. Similar threats to quit the UK have been made by Scotland. Threats like this have the potential to cause economic instability.
Investing can be a daunting process for many foreign nationals but can be an extremely profitable venture when done properly. Here at Persona Finance, we understand the challenges that businesses encounter throughout their journey. We are dedicated to providing the most essential business, accounting and legal services that every business needs to grow in the current market. For more information on our range of services, please contact Persona Finance at [enquiries@personafinance.co.uk].
