March 12, 2015
Why should someone invest in overseas stocks? What inexpensive options are available?
Why should someone invest in overseas stocks? What inexpensive options are available?
You should invest in non-us markets to be well diversified. The US stock market is not the only one. The foreign markets can give a good return as well. The foreign markets will not have the same ups and downs as the US. When the US market goes down the foreign markets may be up. The emerging markets also allow for you to get a more risky but rewarding fund for your portfolio. You should own them in index funds to have the lowest costs and be well diversified within them.
Investing in overseas stocks will allow you to further diversify your investments. US stocks only represent about thirty percent of the global market, so failing to invest internationally leaves a large opportunity for diversification and financial growth untapped. However, you should also be aware that things like the exchange rate risk and instability of certain country’s political and economic fronts make these investments more risky than others.
One inexpensive option for investing in overseas markets is to purchase a low cost, international stock index fund that gives you exposure to developed and emerging international markets.
Well said! Let’s recap.
(1) Investing overseas will provide you asset class categories that run in a different direction from U.S. stocks in many cases. This negative correlated asset class helps you diversify AND reduce your risk, while possibly increasing your returns.
(2) You can do this with a Total International Stock Index fund that invests in primarily developed countries like Germany, Canada, France, and England.
(3) You can also do this with a Emerging Markets Stock Index Fund that invest in developing countries like China, India, Brazil, and Russia.
(4) Both funds can be found at Vanguard with very low expense ratios and no loads (commissions).
(5) Open a Roth IRA today and start investing overseas. Your portfolio will thank you!