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Money Girl
077 MG Investing Internationally...A Primer
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And today our money girl, Loy Habladde International Investing. Did you know that the key to investing is a diversified portfolio? You want a mix of stocks and bonds, property and foreign currency to be able to make it through the rough market 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 a domestic market as well. It's just a matter of doing the research and understanding the possibilities of the downside than 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. Kim, I want you to remember this, international investing is really about perspective. Investing in European stocks is only international investing if you're not European. Have you ever thought that investing in the stocks of the Dow Jones as international and foreign? Well, it is for those investors in Argentina. Here's why international investments are so important. Over the past 30 years, annual returns for the index that tracks the major international stock markets has done better than our market, 16 out of 30 years. Emerging markets typically have double or triple digit returns, and 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 and foreign currencies are worth more for those US dollar-based investors when they withdraw their funds. Also, the range of industries available for investment adds to your diversification than simply investing in what is currently available in the United States. So, if you like investing in alternative industries and diversifying your risk, investing internationally might be for you. Let's start with this tip. I suggest that most investors look to mutual funds when investing abroad. This is because there are a variety of different mutual funds that encompass basically everything most investors should need. There are funds that specialize in stocks, those that specialize in bonds, one for bonds and stocks, and still others for money market funds. Amongst these mutual funds, there are geographic breakdowns for what different companies will handle and control. There are global funds that look for smart investing opportunities worldwide, but often end up putting a good deal of their investments right back into the US market. International funds, of course, only invest in foreign markets. September is a great month for planning. 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Go to policygenius.com or click the link in the description to get your free life insurance quotes and see how much you can save. That's policygenius.com. Now at T-Mobile, get four 5G phones on us and four lines for $25 a line per month when you switch with eligible trade-ins, all on America's largest 5G network. Minimum of four lines for $25 per line to a month without a paid discount using debit or bank account, $5 more per line without a pay plus taxes and fees and $10 device connection charge. Phones would be a 24-monthly bill credits for well qualified customers, contact us before canceling entire accounts to continue bill credits or credit stop and balance on a required finance agreement to bill credits and if you pay off devices early. C-T-Mobile.com. A lot can happen between falling in love with a house online and owning it, between imagining living there and breathing in your new home for the first time. Having an advocate who can help you navigate the complex world of financing, inspections, negotiating, analyzing the market and talking through any anxieties that may pop up, that can make all the difference. That's what the expertise of a realtor can do for you. Realtors are members of the National Association of Realtors and bound by Code of Ethics, because that, who we are. Emerging markets, like Latin America and Eastern Europe, can offer a promising return but are volatile. Regional funds target specific areas such as Asia or the European Peninsula. Lastly, there are country funds which do exactly what they sound like, focused on specific countries for investment. Just like domestic markets, foreign investments are at risk when market values decline, interest rates change or accredited defaults. However, there are other things you need to be aware of before investing with this strategy. There is often a currency risk. This is when the value of the dollar changes in comparison to the foreign currency and can effectively erase all of your gains. A few mutual funds will try to protect this by neutralizing any loss due to currency exchange risk, but that also means they may call it wrong. The political, social and economic risks in foreign countries are also concerned because foreign governments have been known to impose high taxes on international withdrawals and seize corporations for government property. Also, most foreign countries don't have the same regulations that the US does regarding transparency. So obtaining pertinent information can often be difficult. Despite the risks, adding international investments to your portfolio can help to increase your diversification and potentially your gain while only adding incremental risk. Of course, read all of the materials carefully and only invest if you know what you're getting yourself into. Cha-ching, and that's all for now. Thanks for tuning in to The Money Girl. This is Andrew Horowitz, sitting in for The Money Girl. I invite you to listen to my weekly podcast, The Discipline Investor, a top 10 US News & World Report Investment Podcast. It's available for free, so what are you waiting for? Download it today and start on the road to becoming a disciplined investor, available on iTunes and the Zoom Marketplace. And for sending in a question that helped with today's episode, Kimberly is going to get a copy of An American Hedge Fund, how I made $2 million as a stock operator written by my friend Timothy Sykes. And don't forget there's more information in the transcript of the show notes on qdnow.com. As always, everyone's situation is different, so be sure to contact a tax or financial advisor before making important financial decisions. This podcast is for educational purposes only and is not intended to be the substitute for seeking personalized professional advice. Thanks for listening. ♪ Is this house a good price compared to others in the area? Are prices going up or down? If I don't make an offer right this very moment, will I miss my chance? These are just some of the questions a home buyer might ask, and these are the sorts of questions an agent who is a realtor can help answer. Because realtors have the expertise data and access to specialty training to navigate the process of buying a home. They provide support, guidance, and have your back every step of the way. That's what realtors do, because that's who we are. Realtors are members of the National Association of Realtors. Imagine earning a degree that prepares you with real skills for the real world. Capella University's programs teach skills relevant to your career so you can apply what you learn right away. Learn how Capella can make a difference in your life at Capella.edu.