Why Invest Internationally
No single country consistently leads global markets. The US represents about 60% of world market capitalization, but Japan, Europe, and emerging markets have each had periods of outperformance. Investing only domestically means missing growth opportunities elsewhere and concentrating risk in one economy.
Currency Risk and Opportunity
International investments carry currency exposure. When your home currency weakens against foreign currencies, international holdings gain value in domestic terms, and vice versa. Over long periods, currency fluctuations tend to average out, but they can significantly impact short-term returns.
The Simplest Approach
A total world stock index fund provides exposure to approximately 50 countries and thousands of companies in a single holding, with expense ratios as low as 0.1%. This captures global economic growth for compounding with minimal effort and maximum diversification. An international investing guide covers global diversification strategies.