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Diversifying with International Investments

Pro tips on profiting with non-US investments

By
Andrew Horowitz,
Episode #077

Today on Money Girl Voy hablar de, international investing.


Did you know that the key to investing is a diversified portfolio? You want a mix of stocks, bonds, property, and foreign currency to be able to make it through the rough markets unfazed.

Did you know that international investing is the key to many people's investment wealth? Some financial advisors may become wary when you bring it up, but international investing is very important to the disciplined investor. Sure, there are risks, but there are risks in domestic markets as well. It’s just a matter of doing the research and understanding the possibilities for the downside --then weighing those risks against your investment needs. Sound familiar?

It does to Kimberly from Santa Monica who writes in and wants to know more about the pros and cons of international investing...

Foreign?

Kim... I want you to remember, international investing is really about perspective. Investing in European stocks is only international investing if you are not European. Have you ever thought that investing in the stocks of the Dow Jones as international investing? Well, it is for investors in Argentina!

Benefits of International Investing

Here is why international investments are so important.

Strong growth. Over the past thirty year, annual returns for the index that tracks the major international stock markets have done better than the our market 16 out of 30 years. Emerging markets typically have double or triple digit returns.

The falling dollar. Maybe more important is the fact that the US dollar has dropped in value against almost every major currency over the past five years. This means that earnings in foreign currencies are worth more for those US-dollar-based investors when they withdraw their funds.

Diversification. Also the range of industries available for investment adds more to your diversification than simply investing in what is currently for available in the United States. So, if you like investing in alternate industries and diversifying your risk, investing internationally might be for you.

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About the Author

Andrew Horowitz Money Girl
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