People like to feel cash is in safe hands

Picking familiar markets gives people a sense of assurance that their money is in safe hands. Those who have a preference for their country of origin are also likely to make more informed decisions on their investments because they understand the market so well. Besides, if they choose to invest at home, they are building a nest egg they can go back to, should they decide to return in the future.

However, there's more to investing than that. Experts warn that if investors focus on their home country, they could be missing out on a lot of opportunities to grow their wealth.

According to Clem Chambers of ADVFN.com, the only advantage of investing in home markets is comfort. "People don't invest unless they are comfortable. The disadvantages are you limit your opportunities to diversify, and open yourself to the effect of changing currency rates," he says.

James Thomas of Acuma Wealth Management cautions that investors with home-market bias are limiting themselves to one country, and so "any adversity that that market experiences will affect all of your portfolio rather than just a percentage of it."

If working expatriates also invest at home, that means they are investing from a distance, which can often present a number of pitfalls.

Outlay

"Investing from afar can, for example, result in significant outlay on third-party asset management and administration, and there is a distinct lack of flexibility should the market call for quick decision-making," says Reza Nader-Sepahi of Nexus Insurance Brokers.

Aside from currency risk and possible disconnect with ground realities, expatriate investors who focus on their country of origin are also likely to deal with high taxes, adds Shailesh Dash of Al Masah Capital.

But there are signs that things could soon change.

"The prevailing trend favours expatriates investing in their home countries, but this tends to be more of a case of necessity rather than choice. Also, it can change very quickly. At the heyday of the Dubai real estate boom, the trend was quite the opposite," Dash points out.

The UAE, in particular, Sepahi adds, is now proving increasingly popular, as it offers interesting incentives such as security in property ownership, political and economic stability, high healthcare standards, low crime rates and, naturally, year-round sunshine.

Besides, some expatriates in the region, while they're making longer-term investments in their home country, are also investing in local financial products such as government and company-issued bonds, property, bank deposits and commodities like gold and silver.