The smell of fresh baked chocolate chip cookies takes me straight back to my childhood. Mom would only use Nestle Toll House chocolate chips for those cookies. For her, and for me, they *were* chocolate chips. So what does that have to do with global investing?
It is a delicious illustration (see what I did there?) of how a global perspective makes for good portfolios as well as good cookies. Let’s take a closer look.
Think of global investing the way that you shop
Nestle is a Swiss owned company. They’ve been selling their products in America for many years and have become part of our everyday life, but they’re still headquartered in Switzerland. If you buy your baking supplies from Trader Joe’s, you’re shopping at a German owned company. The oven you use to bake your chocolate chip cookies could be made by Samsung, a Korean owned company.
Do you see the pattern? The ingredients, equipment, and other resources used to bake the quintessentially American chocolate chip cookie comes from all over the globe. Used together, they create something that feels satisfyingly right at home.
Invest broadly in global markets
It is desirable to take the same approach when building your investment portfolio. By spreading your money across global markets you increase the probability of capturing unexpected returns. You’ll also gain the added benefit of reducing the risk of over concentration.
It is well understood that all global markets rise in value through time, just not at the same time.
Invest Abroad To Capitalize On Growth Potential
When investing it’s important to remember that many of the products we buy every day are from companies from all over the world. We don’t limit our shopping to only US companies, so why should we limit our investment portfolios to only US companies?
The best portfolios are built with investments in the great companies of America and the rest of the world in order to maximize their earning potential. While it is normal to think of the United States as a world leader, over the past several decades America has never been the number one market in terms of annualized investment performance. It’s why international diversification is so important for your overall investment blueprint.
No one knows what the future will bring. But investing broadly across the globe makes you less exposed to downturns of any one company or any one country. While global investing poses different risks due to currency fluctuations and different political environments, a prudently crafted portfolio ensures a diverse international perspective.
Commit to long term investment planning
I use different analogies to describe how to play the long game when making investments. I’ve described how retirement planning is like cooking a turkey and how important it is to not open the oven too early.
Always remember that the goal is to build a retirement portfolio that can fund your lifestyle when you’re ready to leave the workforce. You need to make smart investment decisions now to ensure your holdings produce enough income to finance your life in retirement.
Diversifying your investment portfolio is one of those smart decisions. But you should also commit to periodic reviews of your investments and your situation. The key is to keep your assets aligned with your goals, needs, and values.
Global investing is easier with a financial advisor
It is not impossible to do this by yourself. But it is easier and leads to more certain outcomes when you work with a guide. A trusted financial advisor is a competent and experienced professional who has access to resources and who has seen situations like yours before.
A guide saves you time and helps you to avoid making expensive mistakes. A guide helps you move confidently toward your desired future.
Let us show you the fiduciary difference. Reach out today for a Second Opinion. You deserve to be sure you’ll have enough money to buy everything you need for as long as you live.