Do you want to minimize risk in your retirement accounts?
If so, consider diversifying your holdings to include foreign investments.
Investing internationally may boost your returns and minimize risk, as you’re“geographically
diversified” and not relying on any single country’s economic performance.
Geographic diversification can be achieved by buying foreign stocks, ETFs, mutual funds,
REITs, and foreign corporate and/governmental bonds.
Saving your pension in one country and keeping your assets in another country is another
form of geographic diversification.
If you want to know more about minimizing risk in retirement planning, download The
Retirement Planning Book, at: Profile-Financial.com/rpb Examples of global investment opportunities:Owning
Foreign Stocks: Most major stockbrokers can help you buy individual foreign stocks, taking
care of any currency conversions if necessary.
If you like stocks, also consider buying an “ADR” (American Depository Receipt).
These investments trade like stocks in American dollars on U.S. exchanges but represent shares
in foreign companies.
Exchange-Traded Index Funds: There are many ETFs that follow a variety of different foreign-based
markets and sectors.
They can be global, regional, or focused on a specific country.
International ETFs may carry lower risk than individual stocks in specific foreign companies
because they are diversified.
Foreign Real Estate: Buying real estate in foreign countries can be considered geographic
diversification, but it usually requires a greater amount of investment capital than
buying stock or mutual funds (i.e., you have to buy a whole property as opposed to just
shares).
To avoid the management hassles of owning physical real estate, consider buying international
REITs (real estate investment trusts).
Unlike owning a physical property, REITs pay dividends, mitigate risks among several properties,
and are more liquid investments because they often trade on the stock market.
Risks associated with foreign investmentsWhile investing some of your retirement portfolio
in international assets can hedge your portfolio against swings in your domestic economy, it’s
not risk-free.
It’s important to remember that the added risks of currency and political uncertainties
in other countries can impact your assets.