- Investment strategies
- Why invest in the stock market?
- Buy and hold or technical analysis? Why you need an investment plan
- Value investing and short selling in volatile markets
- Using technical analysis to support value investing
- Investing in the unexpected
- Franking credits, explained
- What is dividend stripping and is it a sensible strategy?
- Investing in quality IPOs
- How to invest in stocks that benefit from a moving Australian dollar
- Reasons to avoid bonds when interest rates are low
- How value investors use Skaffold
- Quality, growth and value = a winning strategy
- Know your investor type and boost your performance
- Technical + fundamental analysis = better buy and sell decisions
- Fundamental investing
- Value investing and the price earnings ratio
- Intrinsic valuation models and methodology
- Value investments or value traps?
- How to find value stocks in a bull market
- Find value investments in expanding markets
- Why capital raisings struggle to add investment value
- How to value an insurance company
- Top stocks
- 5 qualities of top stocks
- How to find stocks with a competitive advantage
- Why return on equity is the best measure of business performance
- Using cash flow to find value investments
- Finding high quality dividend stocks
- Debt is not always a dirty word
- Why Skaffold share investment software makes sense
- Using economic factors to uncover the best investment options
- How do experts find top stocks to invest in?
- Investing in global stocks
- How to invest in international shares on global stock markets
- Benefits of investing in international shares
Benefits of investing in international shares
Diversifying your portfolio to include overseas stocks brings benefits in reduced risk and greater growth potential.
To successfully invest in global stocks you don’t need to watch the news, or know everything written about a stock in the media.
What you do need to know is their intrinsic value compared to the share price, and the big picture of what’s going on in the world.
The point is, you don’t need to be a specialist in each global stock you buy in order to make money. You just need to know the important stuff. Here are the three most important things you need to know about why you should be investing in global stocks.
1. Global stocks broaden your opportunity pool and allow you to be more selective
Believe it or not, the big-four banks plus BHP, RIO, the ‘Big 4’ banks, Telstra, Wesfarmers, CSL and Woolworths account for more than 50 per cent of the Australian stock market.
Diversifying your portfolio beyond Australia can offer a much broader range of class-leading businesses, and being on the right side of currency movements can further reduce risk. What’s notably absent from the local Australian exchange is leading global technology stocks, leading global healthcare stocks or Asian-focused high growth industrial stocks.
Expanding your portfolio to global markets means more stocks, and more stocks means more choice. And if you are going to own only 20 stocks in your portfolio, you don’t want to compromise on choice.
Investing in global stocks also means that you can invest in the best performing economies, and avoid the laggards. Choice is a powerful thing.
2. Currency tailwinds
The A$ certainly makes it more difficult to invest in the US now that it has fallen from great heights above parity. However, if you believe there is further downside to the A$ there is a reasonable case to suggest that overseas investments, if carefully considered, might produce strong returns.
The downside propensity in the A$ and the strength of the US economy would underpin this opportunity, while in Europe and Japan where there’s less economic strength there’s also less propensity for future gains.
By investing in global stocks denominated in foreign currencies, you can protect against the impact of a descending AUD on your net worth.
3. Global stocks reduce your dependence on the Australian economy
Whether the Australian economy is going through a resources boom our upsurge in housing activity, placing all your bets on the performance of the Australian economy is perhaps unwise.
By learning how to invest in global stocks, you can be more discerning in your investment choices, protect your net worth from a fall in the AUD and reduce your reliance on the performance of the Australian economy.
Going global is easy
It’s never been easier to diversify your portfolio through overseas exchanges, and organisations that offer international broking accounts include: CommSec, St George, E*trade Australia, Westpac, Halifax Investment Services, Interactive Brokers and Saxo Capital Markets.
Direct shares aside, you can also get access to global stocks via ETFs, a LIC (listed investment company) or even a managed fund.