Investing in international stocks should be a key part of your portfolio, but it is important to remember that your allocation should not be too high or too low. Generally, most financial advisers suggest investing between 15 and 25% of your total portfolio in international stocks. This is a good starting point that will give you meaningful exposure to the international market without hurting your portfolio too much if your investments fall out of favor. Once you feel comfortable, you can increase your exposure as needed.
When investing in international stocks, investors should be aware that there are many risks. One of the main risks is limited access to financial information. Because other countries have different requirements for publicly traded companies, you may not have access to the same information as U.S. companies. Additionally, foreign stock exchanges may have lower trading volumes and shorter trading hours than US stock exchanges. To avoid such pitfalls, you should check with your financial advisor or tax advisor before investing in international stocks.
Investing in international stocks can diversify your portfolio and reduce volatility. Additionally, investing globally allows you to access faster-growing segments of the world economy. However, you should be aware that some countries can experience violent swings in the economy due to war, corruption, and political uncertainty.