A decade of dominance by United States stocks raises a common question: why bother investing outside the United States? Paul Fain, Knoxville Certified Financial Planner and President of Asset Planning Corporation, answers this question and discusses international investments this week on WBIR’s Sunday Money.
UNITED STATES STOCKS ARE OUTPERFORMING FOREIGN STOCKS RIGHT NOW… BUT THERE’S MORE TO THE STORY RIGHT?
While it’s true that international equities generally have lagged United States markets over the past ten years, since 2009, the top fifty companies with the best annual returns each year were overwhelmingly based outside the United States: 80% to 90% carried a non-United States address.
WHY IS INTERNATIONAL STOCK INVESTING STILL SO IMPORTANT?
- Diversification – can help smooth out performance
- Higher dividend yields – several foreign countries are paying out attractive dividends
- Currency trends – the United States dollar can be strengthened or weakened against foreign currency which helps add another layer of diversification
- Lower valuations
EXPLAIN THE IMPACT OF A STOCK’S VALUATION…
- Foreign company stocks are cheaper to buy than their United States counterparts.
- Starting-point valuation is a very good predictor of long-term share price returns.
FAST MARKET FACT: International Stocks of Interest
Luxury Goods: France- Kering
Food Company: Switzerland – Nestlé
Big Pharma: United Kingdom – AstraZeneca
Technology: South Korea – Samsung
QUESTION FOR OUR MONEYMAN?
Want to learn more about foreign stocks and why you should bother investing outside of the United States? Do you have other general questions about financial planning, investing, or retirement planning? Send your questions to our Knoxville Certified financial planner Paul Fain or directly to Paul@assetplanningcorp.com!