If you want to diversify your portfolio, investing in international stocks may be the way to go. However, it is important to keep in mind that investing in international stocks may carry different risks than investing in U.S.-based stocks. Before making any investment, learn about the company and its country of origin. This will help you decide if the investment is a good fit for your overall strategy.
When investing in foreign stocks, you need to be aware of the social, political, and economic risks that can affect the market. This includes the possibility of civil unrest or a trade war. In addition, you need to bear in mind that fund management fees in other countries are often higher than in the U.S. to cover the additional costs of researching the country. The increase in expenses will impact your total return.
Another option for investing in international stocks is through a mutual fund. This fund is designed to provide a diverse portfolio and expose you to the economies of other countries. It is recommended that investors have 5% to 10% of their portfolio in foreign stocks. However, this amount can grow to as much as 25% for aggressive investors.
International stocks can be risky, but they have the potential to boost your returns. If you are a more hands-on investor, you may consider investing in companies that are undervalued and have been underperforming for a while. These stocks are often trading for much less than they are worth in the U.S.