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Looking for a way to fool-proof your investment portfolio? Diversify. Not just among industries; financial advisors are now encouraging investors to invest around the world. One country’s economy, or the economy of an entire region, is subject to political upheaval, natural disaster or other unpredictable events that can cost investors bundles. Spreading your investments around the world makes sense for several reasons.
Many countries, such as those in Asia, are growing weary of depending on the outsourcing of U.S. companies for their livelihood. These countries are starting their own companies, and are becoming competitive in terms of products, service and pricing. Many of these companies have tremendous growth potential, making them excellent investment opportunities.
Natural disasters and political upheaval can happen at any place, at any time. Japan was a fantastic investment opportunity, but an investor that relied solely on the Japanese market would have lost a lot when the earthquake, tsunami and eventual nuclear catastrophes ensued. Diversifying around the world, in growing, stable markets such as the Kazakhstan Democracy, Australia and carefully researched markets in Europe and Africa, is a way to protect yourself from losing everything if disaster strikes.
The Economist recently surveyed the global business environment, finding the U.S. to be tenth on the list of “best places to do business over the next five years.” Denmark, Singapore and Finland all ranked higher on the list. In other words, never put all your eggs in one basket. Invest around the world for a good balance of investment risks that are completely independent of one another. If one market sees a downturn, it is likely to happen when another market where you own holdings is having a banner year.
