Many U.S. investors routinely avoid international investing, choosing instead to count on domestic giants to provide exposure to the global economy. But international investing can boost your overall returns versus simply keeping all your money in U.S. stocks.
In the following video, Dan Caplinger, The Motley Fool's director of investment planning, discusses three things that many people don't know about international investing. Dan begins with the observation that not all stocks trade in major U.S. exchanges, making it difficult to obtain shares of Nestle and Daimler without going directly to the foreign exchanges on which their shares trade. But Petroleo Brasileiro (NYSE: PBR ) , Vodafone (NASDAQ: VOD ) , and hundreds of other international stocks trade on the NYSE and Nasdaq through the use of American depositary receipts, facilitating trading for U.S. investors.
Second, Dan notes that international investing requires comfort with currency impacts. In general, a weak foreign currency can hurt investment returns for U.S. investors in stocks in a particular country. But exceptions exist, as export giants Toyota Motor (NYSE: TM ) and Sony (NYSE: SNE ) have done well lately precisely because the Japanese yen has been weak. Finally, Dan concludes by noting that you can't count on U.S. securities laws and disclosure requirements to apply in all foreign countries, making it necessary to take care to avoid nasty surprises.
The other side of the international investing coin
Regardless of the big returns available from international stocks, many investors stubbornly believe that they want to stick only with U.S. stocks. That's fine -- if you pick the right ones. The Motley Fool's free report "3 American Companies Set to Dominate the World" shows you how you can profit from the global economy without sending your money abroad. Click here to get your free copy before it's gone.