International Investing: How It Can Make a More Successful Investor
If you’re already invested in a well-diversified mix of US investments, you may have considered adding international investments to your portfolio’s repertoire.
However, even though international investing can bring benefits to your portfolio, it can appear exotic and perhaps confusing. After all, it is by definition foreign.
Thankfully, international investing doesn’t have to be an incredibly risky or complex venture. The truth is that most long-term investors can benefit from international investing, and reduce their overall risk and increase their returns in the process.
Here are a few focal points on international investing, and some tips on how to utilize it:
Add further diversification
Just like in the Olympic competitions, the U.S. won’t win the gold medal every single time. A wise investor will realize that despite their penchant to invest in domestic stocks, they may not be the top winner year after year. For instance, in the last 12 years (since 2015), the best-performing stock market has been one outside the U.S. Even though you may miss some bigger American wins by concentrating your investments there, you’ll also avoid big searing losses, and possibly enjoy better overall results.
Take advantage of more than half the world’s investments
U.S. equities accounted for slightly more than half (52%) of the entire stock market. Many are unaware of how vast the investment universe is outside the U.S., and mistakenly believe they’re only missing a small piece of the pie. Even if you’re already diversified by company size or industry domestically, you can be missing out on what academics see as an even better way to further reduce your risk and boost your long-term success. These studies have found that the performances in tandem of different countries results in big reduction of risk while also increasing possible returns.
Utilize a smart, long-term strategy
Just like with US equities, prudent investors avoid concentrating their wealth into one international investment, and they practice a long-term outlook. Although there are plenty of opportunities to see high growth as an international investor (especially with emerging markets), don’t let market timing detract from your long-term plans. International investing should be done with a long-term outlook in light of your specific needs and goals.
Want to learn more about international investing?
At LexION Capital, we’re an independent and global wealth management firm. What this means for our clients is that we scour the globe for the best investments to meet their needs and goals. If you’d like to learn more about how we can help you with international investing, don’t hesitate to contact us.