market’s on a gangbusters bull market run-the U.S. That might not seem like such a huge deal when the U.S. “International stock markets represent over 40% of the world’s equity investment opportunities,” says Willis. “If an investor wants real exposure to international stocks, they’re going to want to invest in international funds and indexes.”īy keeping your investing dollars in stateside funds, you’re potentially missing out on huge swaths of the investing landscape. funds,” says Luis Strohmeier, partner and wealth advisor at Octavia Wealth Advisors. “They’re called ‘domestic index funds’ for a reason, and that’s because they’re primarily invested in U.S. While some domestic index funds offer investors limited exposure to international stocks, many experts agree that these funds don’t go far enough to offer complete diversification. Diversification Beyond Domestic Index Funds This creates opportunities of its own for growth if these other “currencies are appreciating against the U.S. peers,” says Nauman Anees, CEO of ThinkMarkets, an international brokerage in Australia and the U.K.īy investing in a different country’s companies, you’re also almost defacto investing in another currency. “International companies could in some cases represent an attractive relative market value when compared to U.S. You might find favorable conditions, like progressive government leadership, tax incentives or even access to natural resources and policies that allow an industry to grow at a more rapid pace than a counterpart could domestically. Going international with your investments may also help boost your returns by exposing your dollars to faster-growing economies. and international stocks don’t move in tandem, including international stocks can help lower risk in a stock portfolio,” says Willis. stocks collectively behave like international stocks. stocks behaves more similarly overall than U.S. Stocks and bonds have different risk and return profiles in different countries, says Veronica Willis, investment strategy analyst with Wells Fargo Investment Institute.įor example, even a diversified mix of U.S. stock exchanges can be powerful assets with multiple benefits. But companies beyond those traded on the U.S. stock market, you might think you have all the investment options you need to properly diversify without ever looking at companies beyond American borders. Given the vast amount of choice in the U.S. By spreading your money out among tens or hundreds of companies, you decrease the risk you lose money overall if one investment goes south. You probably already know how important diversification is in your investment portfolio. Here’s what you need to know to start adding stamps to your investing passport. Owning international stocks-the shares of companies located outside your home country-can help diversify your portfolios, hedge against risk and tap into growth in economies beyond your own.
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