All around the world, access to financial markets diverges. The path took by one country to another is significantly different. For instance, in the United State of America, 52% of their people are investing in the stock market. Meanwhile, in emerging countries like India or Mexico, the number significantly drops. There are only 2% of Indians investing in the stock markets. At the same time, there are only 2.6% of Mexicans being retail investors. They have significantly different numbers because of the Investment barriers faced by emerging countries.
Here are the main barriers faced by Emerging Countries
Geographic Lottery
Where someone lives affect their ability to access financial markets. Other than that, their place also affects their chance to build wealth. People living in developed countries, most of the time, have a better opportunity to invest in the financial market.
Besides, in a country, people living in an urban area also have a higher probability to invest than those living in rural.
Read more: Let’s Start Your Stock Investments with Minimal Capital
Financial Literacy and its Complexity
Billions of adults have low understanding of the basic financial concept. Thanks to the schools which online give people a basic mathematic lesson, but not a financial concept. Therefore, these people do not understand the benefit of investing.
Local Market Turmoil
Local economy turmoil makes it harder for people to be a successful investor. Moreover, if they also still need to prioritize building their wealth and financial stability.
Costs of Investing in Foreign Stock Markets
The price of stocks in a stable economy market can be super expensive. For instance, the price of stocks in Amazon can be more than US$ 1,800. Thus, to invest in a stable foreign market is nearly impossible for people living in weak economies.
Moreover, they sometimes have to pay layers of additional price. For instance, brokerage commissions, stamp duties and also currency conversion fees.
Those list of investment barriers faced by emerging countries is the strongest factor why their people do not invest. To improve the situation the country can improve its economic stability and financial literacy.
