How to Diversify Your Portfolio with International Investments
There are a lot of fundamental rules of smart investing, but one of the best ones is to diversify your investments. A diverse investment portfolio helps to insulate your portfolio from massive volatility that can occur when your portfolio is centered on just one stock, or just one industry. Many people believe they have a well-diversified portfolio, covering the NASDAQ and S&P 500, so that your investments track with the growth of the economy. But this only has you investing in American companies, when our world has tons of other investment options. Here are things you can do to diversify your portfolio with international investments.
Buy International Index Funds
The first thing that you can do to diversify your portfolio with international investments is to buy international index funds for your portfolio. In the same way that there are index funds which track the major American exchanges, or top companies on an exchange, there are these same index funds for all international markets as well. You can purchase index funds that track another country’s economy, or another continent or region, or even the world. Don’t close yourself off to the idea of investing in the world economy.
Invest in International Real Estate
Another great way that you can diversify your portfolio with international investments is by investing in international real estate. Real estate is always one of the safest and smartest investments you can make, because of your ability to leverage your capital for bigger returns. Not all countries are welcoming of foreigners buying property, however. Mexico is one of the best countries for outside investors. You are not required to be a Mexican citizen to buy property in Mexico in most cases. Speaking to a lawyer about your specific situation can help you determine what steps, if any, are needed to invest in Mexican real estate.
Buy International Bonds
The final way that you can diversify your portfolio with international investments is buying international bonds. The US government issues bonds, with a set rate of return and a maturity date, at which point you can cash in the bond for your investment. Other governments offer these bonds as well, and they can make for a safe and effective method of investing while diversifying for international investment.
A diverse portfolio is a resilient portfolio, and diversifying your portfolio can take your investments all around the globe if you wish. Try any of these three methods to expand your investing ambitions around the world.
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