Investing Abroad: A Practical Guide for Brazilians Seeking Diversification

Expanding wealth beyond Brazilian borders has become an increasingly common strategy among local investors. The pursuit of better return opportunities, combined with the possibility of diversifying the investment portfolio, motivates this migration to international markets. But what are the truly viable paths? And do the involved risks outweigh the potential gains?

The Growth of Foreign Investment Among Brazilians

The numbers reveal a clear trend: Brazilians are moving significant amounts abroad. According to data from the Federal Revenue Service released in recent surveys, Brazilians hold approximately R$ 1.1 trillion in assets located outside the country.

The growth is impressive when comparing periods: in 2023, about 816,100 income tax declarations reported these international assets. Five years earlier, this number was only 263,500 declarations. This represents an increase of approximately 200% over five years.

It is important to note that these figures consider only investments formally declared in the Income Tax. Many investments in less regulated assets, such as cryptocurrencies, are not included in these official statistics. Therefore, the actual volume of Brazilians with investments abroad and the total values are presumably much higher than official data, suggesting that this movement toward international markets is even more robust than it appears.

Why Invest Beyond Borders?

The decision to invest abroad is supported by quite concrete reasons:

Access to More Established Markets: Markets like those in Europe and the United States feature established institutions, robust regulations, and a history of stability. This reduces certain types of risks associated with less mature economies.

Currency Hedging: Investments tied to strong currencies like the dollar and euro act as a buffer against real fluctuations. This currency diversification mitigates risks of local currency devaluation.

Access to Global Sectors and Companies: It is not necessary to limit oneself to what the domestic market offers. Cutting-edge technology sectors, innovative pharmaceutical companies, expanding startups, and multinational corporations with long-term growth potential are within the investor’s reach.

Volatility Reduction: Internationally diversified portfolios tend to show less fluctuation than locally concentrated portfolios, contributing to greater predictability of results.

Available Investment Modalities in the International Market

The variety of investment instruments abroad offers options for different profiles and strategies:

Listed Company Shares: Investing in shares traded on exchanges like NYSE or Nasdaq allows direct participation in the growth of global business leaders.

Index Funds (ETFs): These vehicles replicate market indices, providing exposure to multiple companies simultaneously, offering automatic diversification and reduced costs.

International Managed Funds: Funds that allocate capital in global assets, providing professional management and access to markets that would be difficult to reach individually.

Fixed Income Securities (Bonds): Bonds issued by international governments and corporations generate regular interest flows, functioning as a stable income source.

Real Estate: Investments in properties in other countries can generate rental income and potential asset appreciation over time.

Forex Market (Forex): Speculation on currency fluctuations offers opportunities but requires in-depth technical knowledge and involves considerable risks.

Digital Assets: Cryptocurrencies like Bitcoin (currently trading at $91.95K with a -1.78% change in the last 24 hours) and Ethereum (at $3.22K with +1.44% variation) represent an innovative asset class, though characterized by significant volatility. Dogecoin, traded at $0.14 with -3.82% change, exemplifies the speculative nature of this segment.

Practical Process to Start Investing Abroad

For those wishing to begin, the most straightforward path follows these steps:

Step 1 - Choose a Platform: Select a brokerage that offers access to international markets with adequate compliance infrastructure. Specialized platforms facilitate access without unnecessary complexities.

Step 2 - Open an Account: Complete the registration process, providing the documentation required by regulatory frameworks and compliance procedures.

Step 3 - Transfer Funds: Send capital to the account on the chosen platform, observing exchange rates and international transfer costs.

Step 4 - Select Assets: Choose investments aligned with your strategy, goals, and risk tolerance. Many platforms offer analysis tools to support these decisions.

Step 5 - Continuous Monitoring: Track portfolio performance and rebalance as needed, adjusting to changes in your financial situation or market conditions.

Through brokerages, access is significantly simpler than direct institutional processes, which would involve considerable bureaucracy for registration on foreign stock exchanges.

Main Benefits of the International Strategy

Summarizing the advantages of this approach:

• Reduction of Systematic Risk: Spreading investments across different geographic markets and sectors diminishes the impact of localized crises.

• Inflation Protection: Assets denominated in stronger currencies better preserve purchasing power than investments solely in the real.

• Accessible Innovation: Developed markets offer investment opportunities in emerging technologies and business models.

• Institutional Stability: Developed economies have historically shown less volatility and consolidated regulatory frameworks.

Returns: Comparing Brazil versus Abroad

Return comparisons illustrate the differential between investing locally or internationally. The S&P 500 index, which groups the 500 largest American companies, has consistently outperformed the Ibovespa, the main stock index of the Brazilian stock exchange.

Beyond the raw index performance, there is the effect of the dollar’s appreciation against the real, which amplifies returns for Brazilian investors. This currency component adds layers of return to capital gains.

However, precise analyses cannot ignore factors such as brokerage fees, operational costs, currency conversion rates, and administrative expenses that reduce net gains. Even considering these costs, historically, the performance of the American index remains superior and more predictable, with less pronounced cycles than the Ibovespa.

This relative stability provides additional solidity to internationalized portfolios.

Is Investing Abroad Truly Advantageous?

The answer depends on individual factors. For most investors seeking to solidify long-term wealth, the answer tends to be affirmative.

The synergy between geographic diversification, protection against inflation erosion, and access to more robust institutional markets creates favorable conditions for sustainable returns. The strategy works best when international investments constitute a stable and less volatile part of the overall portfolio, serving as an anchor during periods of turbulence in domestic markets.

Naturally, global markets also face crises and systemic events. However, historical series show resilience and faster recovery than many local economies.

For those aiming to build robust wealth, considering foreign investment is not a luxury but a strategy grounded in data, diversification, and the pursuit of long-term financial stability.