International investing is easier to do than ever. But sometimes the simple approach isn't the best one -- and taking a little more time to find a better way to invest can pay big dividends and help you avoid huge pitfalls.

ETFs and Europe
The rise of exchange-traded funds over the past decade has opened the door for U.S. investors to put their money into investments that weren't available to them before. The simplicity of ETFs has led many investors to diversify their portfolios substantially with a wide variety of asset classes. And in particular, international investments are now far easier to buy and sell than they were before ETFs existed.

But the largest international ETFs follow indexes that lock you into certain stocks. For instance, ETFs tracking the MSCI EAFE index of developed international economies include investments in Spanish companies Telefonica (NYSE: TEF) and Banco Santander (NYSE: STD). Although reasonable people may disagree about their future, their past is clear: The stocks have both lost huge amounts of ground recently, as Santander may eventually need to divest itself of substantial assets to raise capital, while Telefonica faces a big potential consumer slowdown in Spain that could eventually spread throughout Europe. The same problems plague most of the largest ETFs that track international stocks: By necessity, many of them put your money into the same names around the world, and some of them will inevitably be companies unworthy of your investment.

Narrowing it down
Of course, ETF providers learned a long time ago that focusing on particular subclasses of assets would help them cater to investors who want specific exposure. So one solution is to choose narrower ETFs that include only the areas in which you most wish to invest.

Single-country ETFs exist for many countries in Europe. If you believe Northern Europe will survive even a full-scale breakup of the euro, then single-country investments in Germany (within the eurozone) or Norway and Sweden (outside the eurozone) could let you invest in a way that's consistent with that idea. Closed-end mutual funds, which also trade on stock exchanges, often limit themselves to a particular country, with funds focusing on Germany, Ireland, and Switzerland representing just a few of the ways you can take a position in Europe.

But even with those smaller-scope funds, you'll still take on risk that you may not want. On one hand, if you want allocations across sectors that are roughly equal, then you may find that a country's primary stock index is heavily skewed toward one or two industries. The iShares FTSE China ETF (NYSE: FXI) has more than half of its assets in financials, keeping you away from more consumer-focused stocks that could benefit from ongoing wealth distribution throughout the population.

On the other hand, if you want that sector-specific exposure, an all-purpose single-country fund may have extra stuff you don't want. For instance, Norway's single-country fund includes big weightings in Statoil (NYSE: STO) and SeaDrill (NYSE: SDRL). But almost half of its assets are in other areas, including banks and telecom stocks that you may not be as excited about. If you want to tie your fortunes to energy worldwide and to promising finds in Norway's domestic waters, the ETF may water down your results.

The only choice that works
If the shortcomings of ETFs and other funds are simply too much to overcome, then your only real choice is to go with individual stocks. That can be difficult in some cases, as even some of the largest companies in the world don't have shares listed on major U.S. exchanges. Nestle is one example: It has the biggest weighting in the MSCI EAFE index, but U.S. investors will only find it trading on the pink sheets.

But plenty of promising stocks in Europe and elsewhere are readily available to U.S. investors. Through American depository receipts, financial institutions create securities that trade on the NYSE or Nasdaq exchanges representing shares of foreign companies, making buying and selling them just as easy as buying or selling a U.S. stock.

The diversification that ETFs provide often ends up making your overall portfolio safer. But in some cases, ETFs include assets you don't want and that add to your portfolio's risk level. When that happens, a healthy set of individual stocks can be a safer way to get the results you want.

Going international is just one way to position yourself for your long-term financial goals. Read The Motley Fool's special report on retirement and more tips on planning for retirement and beyond, with three smart stock names to consider adding to your portfolio. It's free, so just click here and get your copy right now.