Hagemann Wealth Management

global diversification

Global Diversification: Making a Case for International Stocks

Global diversification is an important feature of asset allocation. It’s defined as diversifying stocks, bonds, and cash internationally as opposed to just locally. It only makes sense to invest in an increasingly globalized world, where thousands of miles are just hours, and thanks to online banking, just minutes away.

Here’s why our financial advisors recommend this investment approach.

Might Mitigate Losses

Since you’ve already taken the leap to portfolio diversification, why not take it a step further—an ocean further? There’s absolutely nothing stopping you from investing in a lucrative market on the other side of the world if your own is not up to the task.

Here’s what you could do: start small. Invest about 20% of your money in international holdings, and see how it pans out. Who knows, even a fraction as small as that might make up for the losses garnered by your domestic holdings.

Might Dilute Currency Fluctuations

It’s not always that stocks and bonds under perform. Sometimes the currencies they’re listed in might be unstable. This holds true for both local and foreign currencies.

Therefore, it’s important to invest in a generally stable economy. Once you do that, dollar fluctuations might not hurt your stocks as much. For instance, investing in developed countries like South Korea, Great Britain, or Australia might help to neutralize losses incurred by dollar investments.

Might Offer More Opportunity

Just like there was once a right time to invest in Bitcoin mining, there’s a right time to invest in everything. You should always look at the current performance of an asset, not how far it’s come since it was first introduced.

When you invest globally, you have more options, and can simultaneously spread out your money in multiple securities around the world that are performing within their respective countries. By not limiting your portfolio to a single country, your stock may very well close on a high note everyday.

Might Offer More Options

The opportunity to diversify your portfolio globally is massive when you see that the US stock market is not always correlated to the international stock market.

We’re not talking about markets as a whole, but individual listings within them. They might not always follow the tide, and defy the downward trend taking over the world. Once you find them, you have the upper hand in an under performing global market.

Take the Stock Market By Storm with Our Investment Planning & Advisory Services

Finding a niche overseas that might benefit your portfolio is like finding a needle in a haystack. As a wealth management company, our team’s job is to find such rarities, keep track of how they’re performing, and recommend them to our clients for potential maximum returns.

Global outreach has never been easier as it is with our firm’s financial planning and investment management services.

Reach out to us today to get started.

The information provided here is for general information only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision. All investing involves risk including loss of principal. No strategy assures success or protects against loss. Past performance is no guarantee of future results. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

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