Investing can be a tricky game. Choosing where to put your money and how long to leave it there requires a lot of research, time, and patience. But while many people focus their investing primarily on the U.S. market, there is a lot to be said for investments being made on an international scale. Foreign stocks, like Chinese stocks, have a lot to offer American investors, especially if you’re willing to live with a little risk. Here are three reasons why you should consider investing in international stocks.
- Diversification of Your Portfolio
Investing in international stock is a great way to add some diversity to your investment portfolio. This allows you to get beyond the American market and see gains that are available in markets throughout the globe. According to Investopedia.com, U.S. stocks only make up 30 percent of the global market. By neglecting to take advantage of investment opportunities in foreign countries, you’re giving up the chance to be involved in the other 70 percent of stocks. And with multiple countries having their own markets, you can add ever more diversity by being involved in a variety of international markets. However, it’s important that you take the time to research foreign stocks and stock markets before you begin to diversify your portfolio in this way.
- You Can Get Them For Less
Because of the discrepancies between currency in different countries, you may be able to get a larger amount of stocks or stocks that could be worth more to you by investing in stocks from foreign countries. USA Today contributor John Waggoner said that some people view a dip in currency, like the Euro, to mean that international stocks can be purchased at a bargain. And although investing in foreign stocks is a bit riskier than investing in American stocks, the dividends you can make off these risks may be worth it to you. There is a lot of money to be made in foreign stocks and stock markets.
- Room for Growth
Many foreign countries are still growing and maturing, meaning that their stock markets have plenty of room for growth as well. Charles Schwab attributes a lot of this growth to differences in income levels, population age, natural resources, exports, and free-market policies. With so many things going into the health and potential for return of international stocks, you can find growth in your portfolio and personal wealth by investing in the right foreign stocks at the right time.
As with all investments, it’s best to do as much homework as you can and speak to a professional before making a decision that could be risky for you. But if you find that international stocks are an area that you’d like to try, why not try taking this leap.