Recently, while I was on vacation in Japan, I caught a local television show geared toward individual investors and understanding the basics. In one part of the show, the talking head leading the discussion reviewed the basic risk and reward level of various types of investments. On the far left side was your everyday savings account, with low returns but no risk. The first item to the right of that was bonds, with slightly higher risk and slightly higher returns, then domestic equities and finally international equities, with risk and reward increasing for the last two.

This is the same chart that you would expect to see if on a similar program in the States. What I find a bit interesting is that on both sides of the Pacific, international equities are viewed as the riskiest, but also potentially the most rewarding, asset class. It has me wondering whether investors around the globe view things the same way. There certainly are differences in risk from country to country because of accounting conventions used, market regulation, corporate governance, and, to a lesser extent, currency issues. Though many investors around the globe consider international investing an option of last resort, some companies are safer than others, so there should be solid opportunities in some international markets, just as there are here.

Another international example
Another thing that caught my eye in Japan was real estate. In much of the U.S., real estate is among the best-performing asset classes of the last few years. From 1990 to 2004, the opposite was occurring in Japan, as real estate slowly and regularly declined. When I was there, I saw numerous fliers for brand new three- and four-bedroom houses selling for $200,000 to $300,000. These houses were all about 2,000 square feet and located about an hour outside of Tokyo by local train. The yards and lawns are tiny, but most of these houses have a train station, grocery store, and additional shopping within walking distance. Considering that interest rates are lower in Japan than in the U.S., and that the tax burden in Japan is also lower, single-family real estate begins to look like a real bargain in metro Tokyo compared with what I've seen in metro Washington D.C., New York, San Francisco, and Boston.

But it's not practical for many people in the U.S. to move the 5,000-odd miles to Japan or any other country where real estate may be a better bargain just to save a few bucks. Even if it were possible to separate oneself from friends and family, there are visa, language, cultural, and employment hurdles to overcome. I won't argue with any of those points.

There are other options
Real estate is out, but investing in foreign equities is an option that is open to U.S. investors through American Depositary Receipts. When we think leadership in automobiles, Toyota, Honda (NYSE:HMC), and BMW come to mind just as readily as Ford,GM, and DaimlerChrysler (NYSE:DCX). Except for automobiles, we just don't think of the international competitors as often as the more familiar U.S. names. In most industries, you can find similarly strong companies that don't get the same level of attention that a U.S. company does.

In plumbing, bathroom, and kitchen equipment, American Standard (NYSE:ASD) comes to mind readily, but Japan's TOTO, which also makes sinks, toilets, and plumbing equipment, is rarely considered. At times, Unilever (NYSE:UL), a British/Dutch company, has been a more attractive investment option than Procter & Gamble (NYSE:PG) or Colgate-Palmolive in consumer staples. Many foreign telecoms have provided more attractive investment options than their U.S. brethren largely because their regulatory environment has been more favorable. In pharmaceuticals, Switzerland's Novartis (NYSE:NVS) is just as worthy of consideration as Johnson & Johnson (NYSE:JNJ) and other large American drug manufacturers.

Foolish final thoughts
Considering more companies instead of fewer is a better option and, as companies focus more on global markets, makes a good deal of sense, particularly if the best ones in an industry happen to be based in Europe, Asia, or even Canada. Investing in international companies still requires a focus on management, corporate governance, business outlook, and -- most importantly -- valuation. It also requires getting used to reading Securities and Exchange Commission filings 20-F and 6-K instead of the regular 10-K and 10-Q filings from U.S. companies. A little bit of extra effort can often be worth it if a foreign company offers a more attractive valuation, because that's what investing is really all about -- trying to get the best returns after taxes while taking on an acceptable level of risk.

For more international Foolishness:

Unilever is a Motley Fool Income Investor selection, and Colgate-Palmolive is an Inside Value pick.

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Nathan Parmelee owns shares in Unilever and Johnson & Johnson. He has no financial interest in any of the other companies mentioned. The Motley Fool has an ironclad disclosure policy.