International Stocks--The Pros and Cons of Investing in Foreign Companies

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Should a well diversified portfolio include international stock funds? That's the question I'm covering in this video. I'll first walk through several reasons an international stock fund is NOT necessary. Then I'll explain why I nevertheless invest in international stocks. Finally, I'll cover what I think is the most important factor as you decide what is best for your investment portfolio.

Video Outline

- U.S. vs. International
- Performance (Portfolio Visualizer)
- Current Valuations (VTI vs VXUS--Morningstar)
- Reasons NOT to own international stocks
1. Warren Buffett & Jack Bogle
- Warren Buffett Portfolio--https://robberger.com/warren-buffett-portfolio/
- Bogle on Investing
- https://www.morningstar.com/articles/885739/why-jack-bogle-doesnt-own-non-us-stocks
- https://jasonzweig.com/invest-globally-still/
2. International stocks may have lower valuations for a reason
3. The U.S. is the best place to invest
- entrepreneurial
- Soundest institutions
- Excellent governance
- Well diversified economy
4. U.S. companies do business around the world (so we already have int'l exposure)
- About 50% of revenue and earnings come from abroad
5. Diversification may not be that great
- U.S. Small Cap Value may provide more diversification
- https://www.morningstar.com/articles/977718/bogle-had-a-point-on-international-stocks
6. Many countries are unstable politically, economically or both
- Why I own international stocks (and how much)
1. The U.S. dominance won't last forever
- 2021: https://149347908.v2.pressablecdn.com/wp-content/uploads/2021/05/20-largest-companies-2021.png
- 1989: https://149347908.v2.pressablecdn.com/wp-content/uploads/2021/05/20-largest-companies-1989.png
- Not a single company on the 1989 list made the 2021 list
- Valuations have soared
2. I prefer the added diversification
3. Valuations are lower than U.S. stocks
4. 20% to 30% is reasonable
5. I'm comfortable I can stick with the allocation long term

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ABOUT ME

While still working as a trial attorney in the securities field, I started writing about personal finance and investing In 2007. In 2013 I started the Doughroller Money Podcast, which has been downloaded millions of times. Today I'm the Deputy Editor of Forbes Advisor, managing a growing team of editors and writers that produce content to help readers make the most of their money.

I'm also the author of Retire Before Mom and Dad--The Simple Numbers Behind a Lifetime of Financial Freedom (https://amzn.to/3by10EE)

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DISCLAIMER: I am not a financial adviser. These videos are for educational purposes only. Investing of any kind involves risk. Your investment and other financial decisions are solely your responsibility. It is imperative that you conduct your own research and seek professional advice as necessary. I am merely sharing my opinions.

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