October 24, 2014
Home country bias is a universal problem when it comes to investing. What is it and how can you reduce it?
Home country bias is a universal problem when it comes to investing. What is it and how can you reduce it?
Home country bias is when your prefer stocks or investments in your home country over the rest of the world. You want to be diversified the best you can. You can do that by not owning stock in just one country, which is normally your country of origin. You can easily buy no load index funds at Vanguard that own international stocks. You have an total international fund, and emerging markets and a total international bond fund to pick, and others. You want to have stocks in other countries at times when your home country is having hard economic times, your international stocks are negatively correlated many times and will go up when your home country is going down or vice versa.
Another very good answer, Garrett. I have nothing to add.