Many people are invested in stocks from around the world and don’t even know it, which highlights the importance of a well-structured and diversified investment portfolio. Pure’s Senior Financial Planner, Robert Canavan, CFP®, AIF®, discusses methods for improving your global exposure through investment.
FREE GUIDE | Beyond Borders: Global Investing
Here is an oldie but a goodie.
We’ve all heard it: don’t put all your eggs in one basket.
As we all know a basic tenet of a good investment portfolio is to be properly allocated and diversified.
But truly how diversified are you? At the end of the day, we all love to look and see how the “market” is doing and generally, when we do that, we’re talking about the S&P 500, the Dow Jones or the NASDAQ; three indexes that track US stocks. So, what about the rest of the world?
Did you know that companies outside of the United States make up over 50% of the world’s total market cap? It is a big, big world, but with technology it is shrinking and there is more intercontinental activity than at any time in history.
So that begs the question – how do I increase my international exposure? Well, one way is including global markets in your overall investment strategy. By including these, you are adding different opportunities through multiple asset classes and this in turn can help with volatility.
Decreasing volatility and large fluctuations will create a smoother ride in your overall investing experience.
Now I know people like to buy things they know, hence the bias to US stocks, but what about everyday products from around the world you already use? Let’s think about that Toyota in your driveway or maybe that Nestle Crunch bar you hand out at Halloween. Or how about that nice Louis Vuitton bag you had your eye on? All companies based outside of our border. Global investing isn’t as foreign as you might have thought, and it isn’t all that complicated to get involved. Today with mutual funds, index funds and ETFs, there has never been more ways to invest and increase your global exposure.
Just remember even with the best portfolio there are risks and global markets are no different. They can have risks like political instability, currency fluctuation, and even regulatory issues. But even with those risks including global investing into your overall portfolio should be a piece of the puzzle. A piece of the overall financial plan.
If you are interested in hearing how the global markets play a role in your current portfolio, take advantage of our free financial assessment.
• Investment Advisory and Financial Planning Services are offered through Pure Financial Advisors, LLC, a Registered Investment Advisor.
• Pure Financial Advisors LLC does not offer tax or legal advice. Consult with your tax advisor or attorney regarding specific situations.
• Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
• Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.
• All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.
• Intended for educational purposes only and are not intended as individualized advice or a guarantee that you will achieve a desired result. Before implementing any strategies discussed you should consult your tax and financial advisors.
CFP® – The CERTIFIED FINANCIAL PLANNER™ certification is by the Certified Financial Planner Board of Standards, Inc. To attain the right to use the CFP® designation, an individual must satisfactorily fulfill education, experience and ethics requirements as well as pass a comprehensive exam. Thirty hours of continuing education is required every two years to maintain the designation.
AIF® – Accredited Investment Fiduciary designation is administered by the Center for Fiduciary Studies fi360. To receive the AIF Designation, an individual must meet prerequisite criteria, complete a training program, and pass a comprehensive examination. Six hours of continuing education is required annually to maintain the designation.