International Investing (2024)

FAQs

Is 20% international enough? ›

How much should be invested internationally? In general, Vanguard recommends that at least 20% of your overall portfolio should be invested in international stocks and bonds.

International investing entails greater risk, as well as greater potential rewards compared to U.S. investing. These risks include political and economic uncertainties of foreign countries as well as the risk of currency fluctuations.

Foreign investment can help boost economic development by providing the necessary capital and resources to finance new projects, expand existing ones, and modernize infrastructure. This can lead to increased productivity, job creation, and overall economic growth.

International investing means holding securities issued by companies or governments outside an investor's home country. Through global investment, portfolios are more diversified and may enhance returns and reduce portfolio risk.

Foreign large-growth and foreign large-value funds fill more specialized roles; we consider them “building blocks” that could make up as much as 15% to 40% of a portfolio's assets. Because of the higher risk inherent in emerging markets or region-specific funds, we recommend limiting them to 15% of assets or less.

VXUS's 5-day moving average is 58.65, which suggests VXUS is a Buy.

Despite lagging in recent years, when you look historically: in the last 50 years, international stocks outperformed U.S. stocks in over 40% of all 10-year rolling time periods.

Think long term. 2024 may be a good time to look for bargains in international stocks that have the long-term potential to deliver higher returns than US stocks. Fidelity's Asset Allocation Research Team (AART) forecasts that international stocks will outperform US stocks over the next 20 years.

That may be the case again in 2024. Therefore, a strategy that includes U.S. and international stocks may continue to outperform one that excludes U.S. equities, even though non-U.S. markets appear cheaper.

International portfolios give you more diversification, let you access liquidity in other markets, and can help you reduce the risks of the market you invest in the most.

What is international investment theory? ›

International investment theory explains the flow of investment capital into and out of a country by. investors who want to maximize the return on their investments.

There are two main categories of international investment: portfolio investment and foreign direct investment (FDI).

Investing internationally provides diversification and potential for growth, especially in emerging markets, but it comes with a set of risks. Among them, the main ones are the higher costs, the changes and fluctuations in currency exchange rates, and the different levels of liquidity in markets outside the U.S.

Depending on your return objectives and risk tolerance, your international allocation should be 5-25% of your total stock market investments and the international weighting necessary for truly global exposure is likely to increase over time as global trends become even more entrenched.

Anywhere between 30% to 50% in international is reasonable. The current market cap weight would be roughly 60/40 but of course that fluctuates.

My main purpose of this post is to get an idea of what percentage others allocate to International Stocks. I read a Vanguard article that recommended at least 20% of the equity portion in international, and as high as 40%. Based on the 120 minus age rule, our equity should be 65%.

International investing can be an effective way to diversify your equity holdings. While returns have lagged behind US markets, international ETFs provide diversification benefits as they tend to be less correlated to US equities.