International investment opportunities may be the next step in diversifying your portfolio
When you hear investors and traders talk about the market, they are often referring to the market in their home country. This is known as home bias, and it might be limiting the potential of your portfolio.
It is normal to be a little adverse to foreign investments. You might be less familiar with foreign markets and regulations, making it more of a risk to get involved than it would be in your native market that you have more knowledge on. However, as the internet makes the world more connected and feel smaller, it may be a great move to invest in international opportunities to diversify your portfolio.
Why you may need international investments to diversify your portfolio
Some reasons you may want to consider including international investments in your portfolio include:
- Different large sectors — The market is divided into different sectors, such as technology, energy, financials or real estate. At a given period, one sector might be stronger in one market than another.
For example, the technology sector might be strong in the United States, but the energy sector might be strong in Canada. In this scenario, you may want to diversify your portfolio by investing in technology in the U.S. market and energy in the Canadian market.
- The value of the dollar — The value of the U.S. dollar can fall, which can decrease the value of your investments. However, if other countries have a strong currency, investments in their markets can continue to hold their value.
- Dominant market — You may have a patriotic bias toward the market of your home country, but you must be realistic and accept that other markets may be more dominant than your own country’s from time to time. Market power shifts throughout history, and having international investments can help improve the strength of your portfolio.
Talk to a ProVise CFP® professional about international investment
At ProVise Management Group, our CERTIFIED FINANCIAL PLANNER™ professionals can get to know you and your current financial circumstances, goals, risk tolerance and personal values to help you develop a plan that works for you. We can also create a written plan for you at a fiduciary standard of care. All our written plans come with an unconditional money-back guarantee. If you are unhappy with your written plan, you can return it to us, and we will refund 100% of the fee paid.
Are you ready to talk to a professional about international investment as part of your investing strategy? Contact ProVise today to schedule a complimentary consultation.