by Stacy Francis, CFP®, CDFA
Paris, London and Rome, here we come!
Care to own a little of London or un petite peu de Paris? The relationship between international stocks and retirement savings is along the same lines at brie and French baguettes – you shouldn’t have one without the other.
There is no practical limit to how much of a retirement account can be invested internationally; although, like anything, you don’t want too much of a good thing. Usually 10 percent to 35 percent of international exposure in your portfolio is sufficient.
Mutual funds are by far the easiest way to invest internationally. Your options include international funds (which invest in countries outside of the U.S.), global funds (which invest all over the world, including the U.S.), regional funds (which specialize in one region, such as Europe or Latin America), and country funds (which invest in just one country). There are also emerging markets funds, which invest in countries with younger, less well-developed economies.
The United States stock market is the largest in the world, but it still only represents about half of the global stock market. So get out there and see the world and invest in international stocks through mutual funds.
Savvy Ladies’ Tip: Look at all the things you normally would when choosing a fund, like the fund management, costs, past performance and overall fit with you portfolio. Pay special attention to fees, which tend to be higher in foreign funds than domestic funds, and the experience of the fund manager in that particular part of the world. Visit http://www.Morningstar.com to get this important information.