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  • Writer's pictureAdam Goldfarb

Benefits of International Investing for Diversification

Investors seeking to diversify their portfolios and reduce risks can consider investing in international markets. Diversification is important because investing in a single market or country can expose an investor to more significant risks due to factors such as economic and political instability, currency fluctuations, and market fluctuations. Investing in international markets can benefit from a broader range of opportunities and potentially achieve higher returns.

One of the benefits of investing in international markets is diversification. Investing in a diverse range of markets can help minimize their risk exposure to any single market, which can help protect their investment portfolios from losses. In addition, international markets often have different growth rates and cycles than the domestic market, which means that investors can benefit from investing in both markets.

Another advantage of investing in international markets is that it can provide access to emerging markets, which often offer higher growth rates and potentially higher returns. Markets, such as China, India, and Brazil, have been growing rapidly, and some investors who have invested in these markets have seen significant gains. However, it is essential to note that emerging markets are often riskier than developed markets, as they can be subject to political and economic instability, currency fluctuations, and other risks.

Investing in international markets can also expose investors to companies unavailable in their domestic market. By investing in international markets, investors can gain access to these companies and potentially benefit from their success.

Another option for investors interested in international investing is impact investing, which is the practice of investing in companies that have a positive social or environmental impact. Impact investing has become increasingly popular in recent years as more investors are seeking to make a difference with their investments. By investing in companies that are making a positive impact, investors can generate returns while contributing to a better world.

However, it is important to note that investing in international markets also comes with risks. International markets are subject to currency fluctuations, political instability, differing financial accounting standards, economic volatility, and other risks that can impact investment returns. Additionally, investors may need help accessing international markets, as some countries may have restrictions on foreign investment.

In conclusion, investing in international markets can be a solid way for investors to diversify their portfolios and potentially achieve higher returns. However, it is important to do your research and understand the risks involved. By investing in a diverse range of markets, gaining exposure to emerging markets, accessing companies not available in the domestic market, and considering impact investing, investors can potentially achieve greater success and contribute to a better world.

Any opinions are those of the author, and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. The information has been obtained from sources considered to be reliable, but there is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Every investor’s situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Investing in emerging markets can be riskier than investing in well-developed foreign markets. Investing involves risk and investors may incur a profit or loss. Past performance may not be indicative of future results.

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