4 Surprising International Countries That Could Make You Rich
Time certainly flies when you're having fun -- and much fun was to be had this year, with all three major market indexes returning more than 20% year to date, even taking into consideration our recent swoon over the past week.
To keep this joyous spirit going throughout the next week leading up to Christmas, I've decided to once again count down this holiday season with my own Foolish rendition of the "12 Foolish Days of Christmas." Instead of turtle doves, French hens, and partridges invading pear trees, you'll be privy to high-growth stock ideas, game-changing innovations from a wealth of industries, unique ways to fuel your retirement account, and so on.
Over the previous eight days of our Foolish holiday kickoff, we've counted down the:
- 12 Large-Cap Stocks Set to More Than Double Their EPS in 2014
- 11 Game-Changing Drugs Approved by the FDA in 2013
- 10 Sustainable Dividends Currently Yielding More Than 5%
- 9 Economic Indicators You Need to Follow
- 8 Little-Known Social Security Facts and Benefits
- 7 Under-the-Radar Stocks You Could Hold Forever
- 6 Revolutionary Trends You Should Be Watching in 2014
- 5 Contrarian Stocks You Can Buy in 2014
Now it's time to move the countdown lower by a notch!
"On the fourth day of [Foolish] Christmas, my true love gave to me..."
Four surprising international countries that could make you rich!
Every year, we as investors spend countless hours researching market and growth trends in the United States and rack our brains trying to figure out which U.S. company will become the next Google or Chipotle Mexican Grill. What we often forget, though, is that there are approximately 200 other countries out there that could offer more rapid and consistent growth than we can find in our own domestic markets. Here are four out-of-the-box countries you should consider, as well as some possible investments that could add diversity to your investment portfolio and possibly even make you rich!
Vietnam certainly isn't the first choice for many overseas investors because the government or army owns many of the largest companies there. In addition, a lack of physical and networking infrastructure and a shortage of skilled labor offer even more reasons for investors to keep their distance.
But I see plenty of opportunity in Vietnam to fuel growth in your portfolio as the demand for physical infrastructure projects (e.g., roads, bridges, and so on) and a growing middle class in Southeastern Asia could prove the tipping point to ongoing growth in the country regardless of how larger industrialized economies are performing.
Between 2000 and 2013 (and keeping in mind that the U.S. suffered through two major recessions over that timespan), Vietnam's GDP growth rate never dipped below 3.1% while averaging 6.6% over that 13-year period. I believe this demonstrates pretty consistent and independent growth. The way I would suggest approaching an investment in Vietnam is through the Market Vectors Vietnam Fund , which currently has 28 holdings that are predominantly weighted toward the financial and energy sectors. The annual expense of 0.76% is perhaps a smidge high, but I suspect the growth prospects in Vietnam should handily outweigh that expense premium.
If you'd like a country with a little fewer political concerns and that's a bit more developed, then perhaps you should be taking a closer look down under at our friends from Australia.
Australia is often the forgotten giant because it's a sparsely population country relative to its size that's been pretty dependent on its commodity-based assets to drive growth in years past. With commodities like coal and gold sinking like a stone over the past year, you might be thinking Australia is the last place you'd like to put your money -- but I feel you'd be making a mistake by shunning it from your list.
Australia currently has some of the most abundant mineral and fossil-based assets in the world. Chevron , for instance, has announced 21 separate natural gas liquid field finds off the coast of Australia within just the past couple of years. In addition, many of the world's largest miners, such as Freeport-McMoRan Copper & Gold, rely on Australia's mineral deposits like copper to keep China's demand satiated.
While not offering rocket-fuel type growth, Australia's GDP has consistently averaged about 3% growth since 2000 while never dipping into a recession at any time, which is thanks to its proximity to high-growth Asian markets. Here, I would consider the iShares MSCI Australia ETF , which focuses on a blend of large-cap value and growth stocks. The fund is dominated by financial sector holdings, which make up about half of all investments, but the reasonably low expense ratio of 0.53% and close to 4% yield are bound to turn heads.
3. South Africa
Moving out of the Asia-Pacific region and into the high-growth region of Sub-Saharan Africa, I believe your smartest play remains South Africa.
The worries here are similar to Vietnam in that a lack of developed infrastructure and political concerns always stand at the forefront. In addition, South Africa's reliance on the mining sector could be enough to scare off risk-averse investors.
However, one of the biggest setbacks to South Africa is also its biggest allure: that most Sub-Saharan countries are almost entirely undeveloped in terms of physical and telecommunications infrastructure, leaving literally decades of opportunity for U.S. and international businesses to step in and assist the region with its expansion efforts. MasterCard and Visa, for example, should have a multi-decade growth opportunity in Africa since practically all transactions in this region are conducted in cash. Heavy machinery manufacturers should also see plenty of long-term demand from these regions beginning in the next decade.
With a GDP growth rate that's averaged 3.2% over the past 20 years, the ETF to watch here is the iShares MSCI South Africa Index . Because there's still so much to develop in South Africa and its surrounding nations, the index is made up of a really good blend of sectors and currently 51 different holdings that are yielding a bit better than 2%. This looks like your smartest and safest way to take advantage of Africa's projected rapid growth period.
Finally, for those of you who really like to live life on the edge and take investing risks, let me introduce you to the newly liberated Iraq.
The primary drawback of Iraq has to do with a mixture of political instability given the recent regime change as well as a lack of adequate physical and technological infrastructure throughout the country, which threatens to stagnate its growth prospects.
However, Iraq is also one of the fastest-growing economies based on GDP on the planet. It reported GDP growth of 10.2% in 2012, which follows an average GDP expansion of 7.4% over the past five years. While many investors would presume that oil is the underlying cause for this expansion -- and I wouldn't question that it does play a very key role in providing cash to the Iraqi government -- Iraq is also seeing the rapid expansion of other aspects of its economy, including the banking and telecommunications industry.
As International Business Times reported in February, earlier this year the Iraqi Stock Exchange floated the largest IPO in the Middle East in five years, Asiacell Communications. In other words, while oil is keeping Iraq afloat, it's been able to expand its focus into other sectors, which bodes well for growth-seeking investors.
While no Iraq-based ETF currently exists, I can definitely point you toward France's integrated oil giant Total as a possible investment idea since it has oil-field rights throughout Iraq and is now working in a slightly more stable political environment.
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The article 4 Surprising International Countries That Could Make You Rich originally appeared on Fool.com.Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong . The Motley Fool owns shares of, and recommends Chipotle Mexican Grill, Google, MasterCard, and Visa. It also owns shares of Freeport McMoRan Copper & Gold and recommends Chevron and Total. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.