By: Stephen Jones
A common misconception is that only high net worth individuals or ultra savvy investors should take advantage of international investing. However, if you are looking for an innovative way to diversify your portfolio, investing in international markets may be an option for you.
Investing internationally doesn’t have to be intimidating or scary. In fact, many international companies, and their products, are just as familiar to Americans as domestic companies.
By investing in international markets, investors may expand their investment opportunities and decrease risk in their portfolio. If your portfolio is diversified over several economies, an economy that is in an upswing can offset others that may be in a downswing, since international and U.S. economies tend to move in noncorrelated cycles.
You can further diversify your portfolio by investing in different countries, sectors (e.g., technology versus manufacturing), types of securities (equities versus bonds), and levels of economic development (Asia versus Europe). However, diversification does not ensure a profit and may not protect against loss. In addition, there are potential political, economic, and currency fluctuation risks with international investing that you should discuss with your investment professional, who can make suggestions that match your time horizon and risk tolerance.
Also, investors seeking income through dividends can expand the number of investment options available to them by broadening their portfolio to include the stocks of overseas companies, many of which offer attractive yields relative to domestic investments.
To learn more about how international investments can play a role in your portfolio, contact your financial professional today.
Article provided by Stephen N. Jones, CFP®, a Senior Vice President/ Investments with Stifel, Nicolaus & Company, Incorporated, member SIPC and New York Stock Exchange, who can be contacted in the Florence office at (843) 665-7599.